I received a revised Loan Estimate from my lender showing a higher interest rate and increased closing costs. What does this mean?
When important information changes, your lender is required to give you a revised Loan Estimate showing how this new information affects your loan terms and closing costs.
The Loan Estimate is a form that went into effect on Oct. 3, 2015.
It is illegal for a lender to intentionally underestimate charges for services on the Loan Estimate, and then surprise you with higher charges on a revised Loan Estimate or Closing Disclosure. However, a lender may increase the fees it quoted you on the Loan Estimate if certain circumstances change. Here are some common reasons why the estimated charges in your Loan Estimate might increase:
- You decide to change the kind of loan, for example moving from an adjustable-rate to a fixed-rate loan
- You decide to reduce the amount of your down payment
- The appraisal on the home you want to buy came in lower than expected
- You took out a new loan or missed a payment on another loan, and your credit score has changed
- Your lender could not verify your overtime, bonus, or other income
- The interest rate on your loan was not locked, and locking the rate caused the points or lender credits to change
If your lender gives you a revised Loan Estimate, you should look it over to see what has changed. Ask your lender:
- "Can you explain why I received a new Loan Estimate?"
- "How is my loan transaction different from what I was originally expecting?"
- "How does this change my loan amount, interest rate, monthly payment, cash to close, and other loan features?"
Note: You won't receive a Loan Estimate if you applied for a mortgage prior to Oct. 3, 2015, or if you're applying for a reverse mortgage. For those loans, you will receive two forms — a Good Faith Estimate (GFE) and an initial Truth-in-Lending disclosure — instead of a Loan Estimate. If you are applying for a HELOC, a manufactured housing loan that is not secured by real estate, or a loan through certain types of homebuyer assistance programs, you will not receive a GFE or a Loan Estimate, but you should receive a Truth-in-Lending disclosure.
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