So the way I look at it, if I supply a good-faith estimate I am potentially shooting myself in the foot because I realize that my good-faith estimation is going to be accurate, but the other lenders that they’re likening against most likely will not be close.
As a consumer or a prospective borrower, the very best thing that you need to realize is that a good-faith estimate is simply that, an estimate. Everything in a good-faith estimate is subject to transfer and it is not a written in stone commitment to lend you money. So in other words, just because Ted at XYZ bank leaves you a good-faith estimate with a interest rate of 2.8%, it does not mean that you are locked into that particular interest rate.
The ins and outs of the GFE
When you look at a good-faith estimates are broken into 3 major components. Section 800 deals with lender fees. Any fees sent to you by the lender will be numbered here and sometimes named under different names. The important part is not what these fees are actually called, but that what you are being charged as a total from the lender. This is pretty much all that the lender really has control of in the dealing as far as your fees exist. The next sections will be “third-party” fees which the lender is required to quote you on but has no control over.
Section 900 and 1000. This is the section that’s indicates you what you must pay in advance to obtain the loan. This is called your prepaid items section. Most lenders require that you prepay some interest and some taxes so that they can start your as for ac is count for these particulars. You may also be prepaying some of your home insurance in these.
Section 1100, title fees: this is the part that shows you what the title and escrow fees are going to be. These fees are influenced state by state and should be really really particular to the same with all good-faith estimate that you gather. If you don’t see these fees you better start demanding questions because they have to be paid at closing by somebody.
Section 1200, administration and transfer charges: in this section you’ll see any fees associated with the government. This depends on which state you live in.
So to all comes out to it, the only segment that you need to actually pay attention to when you’re equating lender fees to lender fees to segment 800 of your good-faith estimation. The balance of the sections will be exactly the same regardless of which lender you go through irrespective of what it says on the good-faith estimate.
Keep in mind, when you’re getting good-faith approximations many lenders will show you the nominal so that it will appear that their good-faith estimations beats out all others, and that’s just not right. That’s why we always recommend that you also choose individual based on their cognition, their trust, and their experience.
