Understanding a Good Faith Estimate

A Good Faith Estimate (GFE) is an important yet sometimes confusing mortgage document that potential homeowners and those refinancing their homes may encounter. A GFE could also be one of the most powerful negotiating tools for you to land the best deal on a mortgage loan. This document helps ensure borrowers end up with the same terms they were quoted at the closing table. In this blog I discuss what a Good Faith Estimate is and how you can use it.

A Good Faith Estimate is the estimated closing costs associated with taking out a mortgage loan to buy or refinance a home based on your personal information. Included in the GFE is a summary of your anticipated loan terms, an itemized list of all the various costs involved with financing, and how much money you will need to bring with you to closing. In the past, lenders provided potential borrowers with Good Faith Estimates, however, there have been many changes in the way these are used and provided to clients.

We will need some information from you so be prepared when you come in, call, or apply online to fill out a loan application. Here is a list of what we will need from you to give you a good faith estimate:

·       Your name

·       Your monthly income

·       Your social security number (to obtain a credit report)

·       The desired property address

·       Estimate value of the property

·       Loan amount

·       Other items necessary and relative to the loan

The Good Faith Estimate is provided to potential homeowners to help them avoid overpaying for a loan and sets forth the expected interest rate. Loan charges, third-party fees, and other costs associated with the loan must be displayed uniformly. In the past, lenders weren’t always uniform in their estimations of fees included on the Good Faith Estimate and how such fees should be disclosed. Sometimes sellers agree to pay all or some of the buyer's closing costs, but when they don’t a GFE comes in very handy to maintain the expected expense of purchasing a home.

At Intercoastal Mortgage Company we provide our clients with an accurate Good Faith Estimate and the most professional service a lender can provide. Contact meand begin the loan process to own your own home.