Understanding
a Good Faith Estimate
A
Good Faith Estimate or GFE is an estimated approximation
of the closing costs that you, as the buyer will be responsible
for when the transaction is completed. Because of the Real
Estate Settlement Act, your mortgage lender is required
to provide you with information that is as accurate as possible.
The GFE must be given to you no more than three days after
you have submitted your loan application to the lender.
A Good Faith Estimate is considered a standard
form that is used by potential homebuyers to compare different
quotes from different mortgage lenders. As the buyer, it
is in your best interests to obtain at least two or more
quotes from separate mortgage lenders. Be aware that closing,
or settlement costs can vary from state to state and even
county to county. That is why it is of vital importance
that you thoroughly research the closing process and have
an experienced real estate attorney make sure that everything
is in order. As you obtain these quotes, ask for an explanation
when there are large monetary differences in the itemized
lists of closing costs.
When you buy a home, the closing costs include
all of the expenses incurred during the sale of the home
and implementation of the mortgage. Be aware that it is
not uncommon for the closing costs to be as much as 5% of
the home's sale price. As a potential buyer, it is best
to wait and see what the settlement costs are before signing
any loan contracts.
There are a variety of expenses associated
with the settlement costs, such as fees for a credit report,
title insurance, document preparation, the survey, mortgage
insurance application, attorney, city and county tax stamps,
and underwriting. Please note that the previous example
is not a complete list of closing cost items. Also there
are charges that cannot change at closing, charges that
can increase up to 10%, and charges that can change at the
time of closing.
For a detailed explanation of closing cost
fees, please visit www.hud.gov
Some other recent articles:
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Things to Consider Before Shopping for a Home
What
is a Good Faith Estimate
Choosing
a Real Estate Agent
Items
to Review After a Home Inspection
5
Ways to Save for a Mortgage Downpayment
