New Good Faith Estimate Form Helps in Your Mortgage Shopping

Published by julia | Filed under Buyer / Seller Tips, Market Trends, Pinellas County Homes, Real Estate

The new Good Faith Estimate form helps you in two ways:
• in blank form, it serves as your guide while searching online for mortgage loans;
• when filled out by your lender, it will show you more accurate estimates of your closing costs.

You can download the new GFE form from the HUD website at www.hud.gov/content/releases/goodfaithestimate.pdf. Unlike the old GFE form, this new form talks to you – meaning it tells you why you need certain information and what you’re going to do next. The words have been made simpler and clearer so there’s little confusion.

After downloading the form, you can read the first page – it summarizes your loan and it tells you how long your mortgage rate is locked while you shop for other loans.

Then you can initially skip Page 2 and look at the last chart on the page. This is your shopping chart. By looking at the 12 items on the chart, you would know what to look for when you’re doing your own online search, when talking with a mortgage loan officer or when interviewing a mortgage broker.

You can use the form as a work sheet or scratch pad as you gather rates quoted online by different lenders.

On the whole, the new GFE form consists of three pages, compared to the two-page old form. But the new form is more user-friendly because the old form contains details of fees – even fees not paid in most transactions. The new GFE form tells you in summary form what costs and fees you need to know.

When HUD crafted the new GFE form as part of the RESPA law passed in 2008 and made effective on January 1, 2010, it was responding to the complaints of borrowers over the years that lenders do not disclose all closing fees in advance and that the actual closing cost total they pay on closing day is far above the estimates they were given beforehand.

Now, with the new GFE form, all lenders are required to use it, unlike before when lenders can design their own form. Also, they have to provide the loan at the terms they wrote on the form within the dates agreed upon.

In the new form, there’s also a part where your lender gives you estimates for two options: when you prefer lower closing costs, and when you prefer lower mortgage rate. You have to ask though your lender to fill out this portion, as it is optional for lenders to do it.

No matter what your loan officers say, the GFE closing costs are still estimates, although they are now expected to be more accurate. Provide for up to 10-percent increases in the title insurance, appraisal and pest inspection fees.

Lastly, after receiving the filled-out GFE from your lender, add your down payment amount to the GFE closing costs to get the total amount you need to close.