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The Intelligencer.com, by David W. Myers

A new law limits the amount that home buyers can be charged for the expenses involved in getting a loan, but some prospective borrowers don’t know how the complicated guidelines work.

Dear Mr. Meyers: We agreed to buy a house, and our lender provided a statement showing our loan’s estimated closing costs. The estimate for the cost of a title search and title insurance policy from a company recommended by the lender totaled $1,127, but we decided to use a differnet company because we thought it would save us money. When the deal closed last week, the final settlement statement showed that the company we chose charged us $1,640 for its services – more than 40 percent over the bank’s estimates. Isn’t the illegal, because the new law that you wrote about a few months ago says that the actual closing costs cannot be higher than 10 percent of the lender’s original estiamtes?

ANSWER: I’m afraid that you misread that earlier column.

Under a new federal law that took effect Jan. 1, all lenders are now required to provide prospective borrowers with a standardized, three-page “good faith estimate” of their closing costs. The law essentially divides these costs into three seperate categories: Those that cannot change from the bank’s estimates, those that can rise by as much as 10 percent, and those that can change without limit.

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