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| Good Faith Estimate (GFE) |
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Good Faith
Estimate (GFE) Is
Needed For Every
Mortgage
Estimate (GFE) Is
Needed For Every
Mortgage
Your closing costs must be within the
guidelines of the GFE. The banks had four
months to get this process right. No more
test drives.
Lenders must give each borrower a Good
Faith Estimate of the costs involved in
getting the mortgage. The estimate of
arranging the loan is an itemized list of the
costs and fees. It includes inspections, title
insurance, taxes and appraisal, to name a
few. This document is a crucial part of the
total mortgage contract. The lender is
bound by each figure or estimate he puts on
the GFE. Because of this lenders are more
likely to spend extra time making sure that
the GFE is accurate. If they underestimate a
cost, too bad, they are stuck with it. If they
overestimate, then there is a good chance
that they are losing business to a
competitor.
After the lender receives your loan
application he has 3 days to give you the
GFE if the loan is approved. In the past the
lenders simply provided a worksheet.
Use the GFE to shop your mortgage
You can go to three different lenders and
apply for a mortgage. Get a GFE from each
lender. Now you can compare the loans
against each other.
The objective of the GFE is to get
borrowers to shop. And to do so, you have
to compare apples to apples.
Make sure the GFE is for real
As a borrower you will be signing several
documents. Ask the lender to point out the
GFE and to go through the document with
you.
One cost you will not find on the GFE is the
"cash to close". This is the amount of
money you have to bring to the table to
close the deal. The closing agent will tell you
the amount so that you can get a certified
check.
The GFE is only an estimate. The final
closing costs will be different.
For a sample of the official GFE form
click on the link below:
http://www.hud.gov/offices/hsg/ramh/res/gfes
timate.pdf
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guidelines of the GFE. The banks had four
months to get this process right. No more
test drives.
Lenders must give each borrower a Good
Faith Estimate of the costs involved in
getting the mortgage. The estimate of
arranging the loan is an itemized list of the
costs and fees. It includes inspections, title
insurance, taxes and appraisal, to name a
few. This document is a crucial part of the
total mortgage contract. The lender is
bound by each figure or estimate he puts on
the GFE. Because of this lenders are more
likely to spend extra time making sure that
the GFE is accurate. If they underestimate a
cost, too bad, they are stuck with it. If they
overestimate, then there is a good chance
that they are losing business to a
competitor.
After the lender receives your loan
application he has 3 days to give you the
GFE if the loan is approved. In the past the
lenders simply provided a worksheet.
Use the GFE to shop your mortgage
You can go to three different lenders and
apply for a mortgage. Get a GFE from each
lender. Now you can compare the loans
against each other.
The objective of the GFE is to get
borrowers to shop. And to do so, you have
to compare apples to apples.
Make sure the GFE is for real
As a borrower you will be signing several
documents. Ask the lender to point out the
GFE and to go through the document with
you.
One cost you will not find on the GFE is the
"cash to close". This is the amount of
money you have to bring to the table to
close the deal. The closing agent will tell you
the amount so that you can get a certified
check.
The GFE is only an estimate. The final
closing costs will be different.
For a sample of the official GFE form
click on the link below:
http://www.hud.gov/offices/hsg/ramh/res/gfes
timate.pdf
Readers of this article also enjoyed;
Defective Loans Still A Problem For...
When To Get A Second Mortgage
Fees To Look
For On Your
Good Faith
Estimate (GFE)
For On Your
Good Faith
Estimate (GFE)
The Real Estate Settlement Procedures
Act (RESPA) says that your lender must
give you a Good Faith Estimate (GFE)
within three days of applying for a loan.
The following are some of the fees that
you will have on the GFE. Some fees are
paid in advance of closing the purchase
of the house, and some are paid when
you close the deal at the lawyer's office.
The closing agent will tell you how much
money to bring to the table. Generally,
your total closing fees are from 3% to 6%
of the sales price of the house.
Many of these fees are negotiable, and
depending on how strong your application
is, the lender will waive some of the fees.
Points (negotiable)
Property appraisal
Credit report
Lender's inspection (negotiable - ask for it
to be waived)
Mortgage insurance application
Mortgage broker fee (negotiable)
Tax-related service fee
Application (negotiable - ask for it to be
waived)
Commitment (negotiable - ask for it to be
waived)
Rate lock (negotiable)
Processing
Underwriting
Wire transfer (negotiable -ask for it to be
waived)
Title search
Title examination (negotiable)
Document preparation (negotiable)
Notary
Attorney
Title insurance
Recording
County taxes
Transfer tax (negotiable - some states are
making this practice illegal)
Survey
Pest inspection
Condominium application
Prepaid expenses for interest, hazard
insurance, property taxes, mortgage
insurance and flood insurance.
Your strategy should be to get three GFEs
from three different lenders. This gives
you leverage when you are negotiating the
fees.
Act (RESPA) says that your lender must
give you a Good Faith Estimate (GFE)
within three days of applying for a loan.
The following are some of the fees that
you will have on the GFE. Some fees are
paid in advance of closing the purchase
of the house, and some are paid when
you close the deal at the lawyer's office.
The closing agent will tell you how much
money to bring to the table. Generally,
your total closing fees are from 3% to 6%
of the sales price of the house.
Many of these fees are negotiable, and
depending on how strong your application
is, the lender will waive some of the fees.
Points (negotiable)
Property appraisal
Credit report
Lender's inspection (negotiable - ask for it
to be waived)
Mortgage insurance application
Mortgage broker fee (negotiable)
Tax-related service fee
Application (negotiable - ask for it to be
waived)
Commitment (negotiable - ask for it to be
waived)
Rate lock (negotiable)
Processing
Underwriting
Wire transfer (negotiable -ask for it to be
waived)
Title search
Title examination (negotiable)
Document preparation (negotiable)
Notary
Attorney
Title insurance
Recording
County taxes
Transfer tax (negotiable - some states are
making this practice illegal)
Survey
Pest inspection
Condominium application
Prepaid expenses for interest, hazard
insurance, property taxes, mortgage
insurance and flood insurance.
Your strategy should be to get three GFEs
from three different lenders. This gives
you leverage when you are negotiating the
fees.
| Good Faith Estimate (GFE) The GFE is required by law. The specifice law is the Real Estate Settlement Procedures Act (RESPA. The GFE must be provided by a mortgage broker or lender. The estimate gives an itemized list of all the fees and costs associated with arranging and closing a mortgage. The objective is to help the borrower fairly, and accurately compare various mortgage offers from different lenders, or various mortgage offers from the same lender. The GFE is a standard form and it must be given to the borrower within three business days of the borrower applying for a mortgage loan. Remember, this is only an estimate. Some charges cannot increase, some can increases up to 10%, and some can increase more than 10%. |
| GFE Important Dates: Pay Attention Your Good Faith Estimate (GFE) gives you an estimate of your settlement charges and loan terms if you are approved for the mortgage loan. On page one are the dates. Please pay close attention. The interest rate for this GFE is available through___. After this time, the interest rate, some of your loan Origination Charges, and the monthly payment shown below can change until you lock your interest rate. If you do not lock your rate by the specified date, some substantial changes could be made to your mortgage. And in many cases, to the benefit of the lender. After you lock your interest rate, you must go to settlement within ______ days (your rate lock period) to receive the locked interest rate. If for some reason there is a delay in closing, your rate could be increased. So be sure to close on time, or have a clause that would address this issue, and spare you the penalty. Readers that read this also liked: What Is Foreclosure? Helping You Avoid Foreclosure. The Aftermath Of Foreclosure - Taxes. Your Mortgage Approval In 9 Easy Steps |