Understanding the Good Faith Estimate
Changes to the Good Faith Estimate Lenders Are Required to Provide
In an effort to correct problems in the residential lending arena, the federal government recently mandated changes to the form lenders give borrowers, the Good Faith Estimate (GFE).
Here is a summary of the those changes:
Fees that cannot change from original GFE to final settlement
Lender’s origination and underwriting charges
Credit or “points” based on specific interest rate chosen
Fees that can increase up to 10% at settlement
Services required and recommended by a lender. If you select a third-party provider (for title services, title insurance and recording charges) from the lender’s approved list, fees cannot increase by more than 10% from the upfront estimate to the final number. Sage recommends you not use affiliated providers, and we will help you find the best deals for these.
Fees that can change without limit
Charges from service providers (such as title insurance) chosen by you, but not recommended by the lender. This category also includes things like daily interest charges, homeowner’s insurance, as well as flood and pest insurance, if necessary. It encourages you to do your own shopping, which is a good idea. We will get quotes for you and recommend providers who will not “surprise” you at settlement.
More information available in HUD’s booklet Shopping for your Home Loan.