What happens if closing disclosure of mortgage refinance assumes higher principal balance than real?

Question

I'm going to refinance the mortgage and got closing disclosure. It says my current lender will get $257K on closing. However, my balance is $254K. I called the agent to clarify why expected pay off is higher than real and she said "Do not worry, on the closing date it will be corrected to exact value".
However, I'm still in doubts

why they cannot put correct value (as a matter of the fact $257K is 4 months old balance!) or as close to current as possible, i.e. no more than one month old.

closing date is on Saturday, I do not think they can call current lender on Saturday to get the exact value

(most important question) what happens if they send $257K instead of $254K. Who is responsible for taking $3K back from the previous lender? Me? New lender?

Aganju · Accepted Answer

Normally, the previous lender will send that overpayment back to you, they are used to that; you don't lose it. There is little to worry about that.
However, what you should consider is that of course that unnecessary cash gets financed too, so although you will get it in your hands, you'll pay interest on it for the next N years (unless you pay it right away off on the mortgage), and many fees - including the lender's sales bonus - is proportional to the total, so of course they love to go a little bit higher.
Most people are also happy about 'a little extra cash out', not realizing that they will pay 15 or 30 years interest on it.
Don't worry if the amount is 50 or 100 bucks off - but for three months payments, it becomes something to consider. Remember, once you have the money, you should right away pay it as 'extra principal' back in your mortgage, and save yourself months of rate paying at the end.

What happens if closing disclosure of mortgage refinance assumes higher principal balance than real?

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