Loan Officer Practice Exam 2025 – 400 Free Practice Questions to Pass the Exam

The prepaid fee that is subject to unlimited tolerance for change when compared to the Loan Estimate is transfer taxes. This means that the lender can increase this fee without any limitations when it comes to finalizing the closing costs. In the context of the Loan Estimate regulations, transfer taxes are not subject to the 10% tolerance threshold that applies to other fees, allowing them to fluctuate significantly without triggering a requirement for the lender to compensate the borrower with a revised disclosure.

Understanding this concept is essential for both borrowers and loan officers, as it highlights the varying degrees of predictability within different fees. For items like property taxes, homeowner's insurance, and mortgage insurance premiums, the changes are limited to a specific percentage threshold, which provides borrowers with a level of certainty regarding their closing costs. Transfer taxes, being exempt from these limitations, can introduce variability in the total costs that borrowers may face at closing.