What is a Good Faith Estimate?
So what exactly is a GFE?
A Good Faith Estimate is a document your mortgage lender provides to you which outlines the basic information on the terms of the home loan along with estimates of the closing costs that will be associated with the loan. Your lender or mortgage broker is required to give you a GFE within three business days after receiving your loan application.
What happens if I’m not approved for the loan?
Your lender is required to provide you with an explanation of why your loan application was rejected within 30 days, or they have to notify you that you have 60 days to request the reason why it was denied.
Am I required to move forward with the loan after receiving the GFE?
Getting a Good Faith Estimate does not force you to take the loan. Likewise, giving out a GFE does not force the lender to approve the loan. All the GFE does is provide the consumer with an estimate of costs that will likely be incurred through the mortgage. This allows the borrower to compare offers from different lenders, and more importantly, understand the true cost of the loan, especially the lenders fees, so they can make a well-informed decision.
What information is on the GFE?
GFEs generally include the following information:
- A summary of your loan terms, including but not limited to…
– whether the rate is fixed or adjustable
– if there are prepayment penalties
– if the loan has a balloon payment
- Summary of closing costs, including but not limited to…
– recording charges
– origination charges
– deposit for escrow account
– homeowner’s insurance
Escrow account information:
Important dates, such as when you need to lock in the interest rate, when the GFE expires, etc.
In addition to this information, a GFE will also include a trade-off table and a shopping chart. The trade-off table is a worksheet that allows the borrower to compare savings between getting a lower interest rate or paying lower closing costs. The shopping chart allows borrowers to evaluate different types of loans by comparing the different terms and settlement charges associated with each.
If you have any specific questions or concerns about your Good Faith Estimate, don’t hesitate to ask your lender for clarification. Being a well educated consumer goes a long way, especially when you’re making what is likely to be the biggest investment of your life!
Simply give eLEND a call at 800-634-8616 if you have any further questions. You can also ask questions through our Live Chat window. No matter how you reach out, you’ll be connected to a licensed mortgage professional who can help you understand your options and provide you with a free rate quote.
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