You got a Loan Estimate. You read it, you budgeted around it, and you felt good about the number. Then a second one showed up with different figures, and nobody walked you through what moved or why.
That happens constantly, and here is the part most borrowers do not know: some of those changes are perfectly legal, some are legal only under specific conditions, and some are not allowed at all. The difference is written into federal rules, and you are entitled to an explanation.
A rate quote is marketing. A Loan Estimate is a regulated disclosure. Your lender has to deliver one within three business days of receiving your application, and the format is standardized on purpose so you can lay two lenders side by side and compare the same boxes.
That standardization is your leverage. It is also why a changed Loan Estimate deserves a real answer rather than "rates moved."
A lender cannot simply send a new Loan Estimate with better-looking numbers for them. To revise one, there has to be what the rules call a changed circumstance. The recognized reasons are narrow:
When a lender issues a revised Loan Estimate, it generally has to reach you within three business days of learning about the changed circumstance, and no later than four business days before closing.
If you get a revised Loan Estimate and none of the above happened, that is your question to ask, in writing.
Every fee on your Loan Estimate falls into one of three categories, and each has a different rule about how much it can move by closing.
These cannot go up from your Loan Estimate to your Closing Disclosure unless a valid changed circumstance applies: the lender's own origination charges, discount points, fees paid to an affiliate of the lender, fees for required services you were not allowed to shop for, and transfer taxes.
If one of these is higher at closing without a documented reason, the lender owes you the difference. That is a cure, and it is not optional on their part.
Recording fees, and fees for third-party services where the lender gave you a written list of providers and you chose from that list. These can increase, but only by up to ten percent cumulatively as a group. One fee can exceed ten percent as long as the group total does not. If the group exceeds it, you are owed the excess.
Prepaid interest, homeowners insurance premiums, escrow deposits, and services you shopped for on your own outside the lender's list. These can change without limit, because they are not really the lender's to control.
A large increase here is not automatically a red flag. But it is where a low initial estimate can make a loan look cheaper than it is.
Here is the pattern I see most often when someone brings me two competing offers.
Lender A and Lender B quote nearly the same rate. Lender B's cash-to-close number looks several thousand dollars better. The borrower is ready to go with Lender B.
Then we open both documents and compare the same boxes. Lender B estimated a lower annual homeowners insurance premium. Lender B assumed fewer months of taxes going into escrow. Lender B set prepaid interest based on a closing date at the end of the month.
None of that is a fee. None of it is money Lender B is saving you. Those numbers get trued up to reality at closing, and they land in the no-tolerance bucket where nobody owes you anything for guessing low. The loan was never cheaper. The estimate was just more optimistic.
If your Loan Estimate changed and the explanation was vague, you do not have to accept it. You are allowed to ask which changed circumstance applied, and which tolerance bucket the fee sits in. You are also allowed to walk. A Loan Estimate does not obligate you to that lender.
If you would rather have another set of eyes on it, send it to me for a free LE Review. I will read every line, tell you what moved and whether the lender was allowed to move it, and give you a plain-English verdict on whether the rate and fees hold up. Usually within one business day. No cost, and no obligation to work with me afterward. I have spent 38 years reading these documents, and I would rather you catch a problem now than discover it at the closing table. Once you reach the closing table, the next document to check is your Closing Disclosure.
Dan Frio is a federally registered mortgage loan originator with PBT Bancorp, NMLS #257781. Able to assist borrowers with mortgage financing nationwide. Serving Chicago, Kane County and the Fox Valley.
Dan Frio | NMLS #246527 | PBT Bancorp | NMLS #257781 | 524 Main St, Hazard, KY 41701 | Equal Housing Lender
This article is general information about the mortgage disclosure process and is not legal or financial advice for your specific situation.
