Compare final, estimated costs at closing

House on mortgage

One of the last things to do before closing on a mortgage is to make sure that the final costs of your loan are in line with the estimates you were given when you applied.

Those expenses are listed on the "HUD-1 Settlement Statement," a standard form that's completed by the title company and must be available for you to review at least one day before the closing.

The U.S. Department of Housing and Urban Development has made that task a little easier by creating a new settlement statement that compliments the new, standardized "Good Faith Estimate" lenders must use.

It does that by cross-referencing the final costs on the settlement statement to the estimated costs you received -- and presumably approved -- on the GFE.

Take, for example, how much interest you must pay in advance to cover the time between your closing date and your first mortgage payment.

The new HUD-1 provides the final amount on line 901 and sends you to "GFE #10" (the box labeled "10") to see the estimated amount for this interest payment.

Recently revised rules also require lenders to hew more closely to their estimated origination charges once borrowers have received their GFE.

For settlement services the lender chooses -- title insurance and government recording charges, for example -- the final cost can be no more than 10% higher than what was on your GFE.

If you see a big discrepancy between what you were told you'd have to pay and what the final costs turned out to be, contact your mortgage broker or loan officer right away.

It's never too late to delay a closing if you're being hit with unexpected costs.

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