17. Loan Estimates: Services You Cannot Shop For

by Local Title

As you review your Loan Estimate, it’s essential to understand the services for which you cannot shop. These costs, paid to outside parties rather than the lender, play a crucial role in the loan process and contribute to the overall expenses associated with your real estate transaction. Here’s a closer look at the services you cannot shop for:

Appraisal

An appraisal is a crucial step in the loan process, as it determines the value of your property on behalf of the lender. Appraisals help ensure that the property’s value aligns with the loan amount and serves as collateral for the mortgage. While borrowers cannot shop for appraisal services, the cost of the appraisal must be disclosed on the Loan Estimate and remain consistent throughout the transaction.

Credit Report

Lenders typically require a credit report on borrowers to assess their creditworthiness and risk profile. This report provides insight into the borrower’s credit history, including payment history, outstanding debts, and credit inquiries. While borrowers cannot shop for credit report services, the associated costs must be disclosed upfront and remain unchanged throughout the loan process.

Flood Risk Assessment

In areas prone to flooding, lenders may require a flood risk assessment to evaluate the property’s susceptibility to flood damage. This assessment helps mitigate risk for both the lender and the borrower. While borrowers cannot shop for flood risk assessment services, the associated costs must be disclosed on the Loan Estimate and remain consistent throughout the transaction.

Tax Monitoring and Research

Tax-related services, such as tax monitoring and tax status research, are essential for assessing property tax payments and ensuring compliance with tax regulations. These services help protect the lender’s interests and ensure the property’s tax obligations are met. While borrowers cannot shop for these services, the costs must be disclosed on the Loan Estimate and remain unchanged throughout the transaction.

Zero Tolerance for Changes

While borrowers cannot shop for the services outlined above, it’s crucial to note that the prices for these services on the final loan disclosure must match the prices listed on the Loan Estimate. Items categorized as “Cannot Shop” have zero tolerance for changes, ensuring transparency and consistency in the loan transaction.

Understanding the services you cannot shop for on your Loan Estimate is vital for navigating the real estate loan process. By familiarizing yourself with these costs and their associated requirements, you can ensure compliance with disclosure regulations and make informed decisions throughout the transaction.