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Good Faith Estimates

November 20, 2017
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In previous articles, we discussed loan pre-approval and pre-qualification, which occur when a borrower makes a loan application. The big takeaway from this process will ultimately be a Good Faith Estimate or (GFE).

This is a form that details the basic information about the terms of the loan for which you have applied as well as a breakdown of the estimated costs associated with acquiring that loan.

The Good Faith Estimate is a requirement of the Real Estate Settlement Procedures Act (RESPA). The idea behind the GFE is to give the borrower a way to compare costs between lenders. The lender is required to provide you with a GFE within three business days of completing the loan application.

There is a catch though, in order to have a completed loan application, the lender needs a property address. Since you are in the pre-approval stage, you probably won’t have a property address yet. In this case, you can get something from the lender called a “fee sheet” this is a cost breakdown, similar to the GFE.

The fee sheet is essentially a rough draft of the Good Faith Estimate. Fee sheets are an easier way to comparison shop without a specific property address.

Once you do have a property under contract, make sure the lender provides you with a “Good Faith Estimate” within 3 days of application.

It’s a good idea to share the Good Faith Estimate with your Realtor®, they should be able to explain what the fees are for and which ones are appropriate.

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