The Good Faith Estimate

So, you've taken an application with a mortgage broker. He has told you your monthly payment and the total amount you will need at the time of closing. How do you know the charges on the loan are fair? How do you compare this loan to others you have been offered?

Check the GFE. The Good Faith Estimate can be your weapon to get the fairest price for your loan. If you don’t take a good long look at this infinitely important legal-sized piece of paper, you may just be throwing your money away.

This single document will detail every specific charge on your loan. Not only does it list your charges, but it also itemizes them to show whom these charges are being paid to. In addition to that, it breaks down all debits and credits on your loan. This will help you come to the final “bottom-line” figure. This is the dollar amount that you will either be paying to the escrow attorney, or that you will be paid by the proceeds of the loan.

This miraculous document also does one last thing. There is a section that breaks down your total housing payment. The payment includes your Principal, Interest, Taxes, and Insurance. If you have more than one loan on your property it will include the other loan for you as well. Mortgage Insurance and Housing Dues will be shown if they apply to you. This is the best way to show you your true combined housing expense.

That is a lot of information for one piece of paper. That information also happens to be almost every last detail of the mortgage loan being proposed to you. After realizing all of the information that is included in a Good Faith Estimate, the importance of this document is easily recognized.

My best suggestion to you is to hold on to the original signed copy of your GFE. You can compare this form to the final document that you will sign at closing. You will easily notice any changes between these forms because they are set up very similarly. You should realize that the numbers will change, that’s the nature of an estimate, however your broker should be able to explain any noticeably large changes.

Kevin Blasi has been originating loans for 4 years in Northeast PA. He also manages a blog as a free resource to educate consumers about the mortgage lending process at: http://explaintome.blogspot.com
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