TRID tolerance: which closing costs can go up

Lenders must give you a Loan Estimate in good faith. Under the federal TRID rules, good faith is measured by comparing what you actually pay at closing with what the Loan Estimate said. How much a charge is allowed to grow depends on which of three groups it falls in. That allowed growth is called its tolerance.

The comparison is with the Loan Estimate the lender is held to: your original one, or a revised one issued for a valid reason. If you pay more than the tolerance allows, the lender has to refund the difference.

These charges can't increase at all between the Loan Estimate and closing unless there's a valid reason:

• fees paid to the lender, to a mortgage broker, or to a company affiliated with either, including origination charges and points
• fees for third-party services the lender required but didn't let you shop for, such as the appraisal, credit report and flood certification
• transfer taxes

Lender credits are treated the same way. A credit that shrinks raises what you pay, so it's generally held to zero tolerance too. And if the lender let you shop for a service but never gave you the required written list of providers, those charges are generally held to zero tolerance as well.

This group covers recording fees, plus required third-party services you were allowed to shop for where you picked a provider from the lender's written list (and the provider isn't the lender's affiliate). Title and settlement services often land here.

The limit applies to the group as a whole, not to each fee. Add up everything in the group on your Closing Disclosure and compare it with the same group on your Loan Estimate. The total can be up to 10% higher. One fee can rise more than 10% if others fall.

The allowed total is $1,650 plus 10%, or $1,815. The Closing Disclosure total of $1,925 is $110 over, so the lender owes you $110.

Some costs depend on things the lender can't fully know in advance, so they can change without a tolerance limit:

• prepaid interest, which depends on your closing date
• homeowner's insurance premiums
• amounts put into your escrow account
• services you shopped for and got from a provider that wasn't on the lender's list
• services the lender doesn't require. The owner's title policy, marked optional on the Loan Estimate, is a common example.

These estimates still have to be based on the best information the lender reasonably had when it made them. A wildly low estimate is worth questioning, even though there's no fixed limit.

A lender can issue a revised Loan Estimate, and use the new figures as the baseline, only for specific reasons. The most common:

• A changed circumstance. Something outside the lender's control happens, information the lender relied on turns out to be wrong or changes (for example, the appraisal comes in lower than expected), or the lender learns something new it didn't rely on before.
• Your eligibility changes. For example, part of your income can't be verified.
• You ask for a change, such as a different loan amount or loan type.
• You lock your rate after the Loan Estimate was issued, which can change points and lender credits.
• You wait too long. If you don't say you want to proceed within 10 business days after the lender gives you the Loan Estimate (or a longer period the lender allows), the lender can re-estimate.

Two limits apply. Only the charges affected by the change can go up, and only by what the change justifies. And the lender has to send the revised estimate within three business days after it learns of the change. Close to closing, revisions show up on a corrected Closing Disclosure instead of a new Loan Estimate.

A lender underestimating a fee, or making a calculation error, is generally not a valid reason to charge you more.

If you paid more at closing than the tolerance rules allow, the lender can fix it by refunding the excess no later than 60 days after closing and sending you a corrected Closing Disclosure that reflects the refund.

Often the fix appears at closing instead, as a lender credit for the amount above the legal limit, shown on page 2 of the Closing Disclosure and noted in the "Did this change?" table on page 3.

1. Compare line by line. Put your Closing Disclosure next to your Loan Estimate (and any revised ones) and sort each fee into its group. Remember the 10% group is judged on its total.
2. Ask in writing. Ask your loan officer what changed and whether a revised Loan Estimate covers it. If they cite a changed circumstance, ask to see the revised estimate.
3. Ask for the cure. If there's no valid reason, ask the lender to correct the fee or credit you the excess. Raising it before closing gives the lender time to fix the Closing Disclosure.
4. Keep records. Save every Loan Estimate, Closing Disclosure and email.
5. Get help if you need it. If the lender doesn't resolve it, you can submit a complaint to the CFPB (opens in a new tab). A real estate attorney can advise on your specific situation.

New to these forms? Start with how to read your Loan Estimate and Closing Disclosure explained.