Goodspeed: Read all the paperwork before signing for loan
QUESTION: When we first went in to talk to our lender about a mortgage, the rep told us closing costs would be about $8,000. Then we found out they were going to be almost $9,500. This is a big difference and has really emptied out our bank account.
ANSWER: Is there a question here? If you are questioning the discrepancy in closing costs you received from your lender, all I can say is that you must not have read all of the paperwork your lender gave you when you applied for the loan.
Since 2015, lenders have been required to give borrowers two disclosure forms that set pricing in advance and make it easier for borrowers to compare mortgage terms and better understand what to expect at closing.
The first form is the loan estimate form. Lenders are required to provide borrowers this form within three days of submitting a mortgage application. The three-page form details the terms of a potential loan, including the amount borrowed, interest rate, whether the rate is fixed or adjustable, and other terms of the loan, as well as estimated closing costs.
The second form - the closing disclosure form - must be received by the borrower at least three days before closing. The two forms should match. The loan amount, interest rate, monthly payment and other costs should be the same on both forms. If not, borrowers should ask their lender why.
The closing disclosure form will also detail the amount of your monthly mortgage payment figure, including any mortgage insurance and estimated escrow costs, and will detail the amount of the closing costs.
The disclosure rules allow lenders to make changes under certain limited circumstances in pricing, including increases in charges. But at the end of the process, itemized charges in the loan estimate should line up with the final closing costs.
If you are planning to buy a home and get a mortgage, and there is a change in the loan estimate you were given, ask your lender for an explanation. Make sure you review the closing disclosure form and all charges carefully, and understand and agree with everything before the final settlement date.
Linda Goodspeed is a longtime real estate writer and author of “In and out of Darkness.” Email her at: firstname.lastname@example.org.