Referred to as a GFE, a good faith estimate is required by the United States’ Real Estate Settlement Procedures Act to be provided by a mortgage broker or lender to a customer.
Its main purpose is to give an individual an estimate of his loan terms and settlement charges if approved for a loan.
Included in the estimate is an itemized list of costs and fees that must be paid before the loan can close.
The closing costs or settlement costs cover each expense linked with a home loan.
Included are taxes, title insurance, inspections and other charges. A GFE for a mortgage is simply a document required for the loan process.
Importance of a GFE for a Mortgage
As a document provided to the borrower during the application process, GFE helps borrowers to have an informed decision about mortgages for their current situation.
With it, the borrower will be able to see what he or she will be charged during the process, and can compare different loans to get the best deal.
A GFE has to be provided to the borrower within three (3) days of applying for a mortgage loan or receipt of a credit application.
The initial and final GFE may differ if there would be any changes in the conditions of the loan during the application process.
Fees Included Within a Good Faith Estimate Mortgage
The fees that comes with a GFE fall into different categories, which includes loan fees, reserves, fees that should be paid in advance, government fees, title charges and other extra charges.
Benefits You Can Get From a GFE
By getting the GFE, you can feel at ease that the loan will be properly processed.
By discussing your income ratio and debt with your lender and attaining the GFE, you can easily have an idea about what your monthly payment should be.
With it, you will know the maximum sales price and prevent over priced properties.
You can easily find a location in your price range that fits your budget and needs.
Tips in Using a Mortgage GFE
The very first thing that you have to do when receiving a GFE is to ensure that it really is a GFE.
Accurately using the GFE is a means to an end. The main goal of regulators is to encourage consumers to compare different loans.
You can use a GFE as a tool when shopping for properties.
The final page of a three-page GFE usually has a shopping cart, which persuades borrowers to make GFE comparisons from various loan originators.
What the Good Faith Estimate Mortgage Does Not Include
Not all information can be found in the new GFE. It now omitted cash to close, which is fundamental if you are a borrower.
The old GFE offers an estimate of the check size that should be brought to closing by the borrower. This estimate is now provided by some lenders in a supplemental worksheet