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A good faith estimate (GFE) is an important document provided by mortgage lenders when potential borrowers apply for a loan. The GFE is an approximation of the costs associated with a loan, including closing costs, taxes, and the loan’s interest rate and term. It also outlines the terms of the loan, including the rights and responsibilities of both the lender and borrower, as well as the obligations of each party following the loan.
A GFE must be provided to the borrower within three business days following the initial application. It is a fair assessment of the expected fees and costs related to the potential loan; however, the figures and terms outlined in the estimate are only approximations. The GFE serves as a tool for borrowers to compare the estimated costs of different loans from different lenders to ensure that they are getting the best deal and that their mortgage is tailored to meet their individual needs. To protect themselves against any pressure or misleading information from lenders, borrowers should always ask for a GFE as soon as they begin searching for a loan.
Currently, GFEs only apply to reverse mortgages. However, similar loan estimate forms are being used for other home loans. The Consumer Financial Protection Bureau (CFPB) developed the loan estimate form to replace the GFE for new mortgages, such as those associated with a home purchase or refinance. It is similar to the GFE, but more detailed and thus more expensive for lenders to produce.
Borrowers should use the GFE to make sure they are aware of the costs associated with their loan and to ensure they are getting the best deal. It is important to remember, however, that while the terms and costs outlined on the form are estimations, they are not guaranteed. Therefore, it is advisable to shop around and compare multiple estimates before choosing a lender and finalizing the loan.
A GFE must be provided to the borrower within three business days following the initial application. It is a fair assessment of the expected fees and costs related to the potential loan; however, the figures and terms outlined in the estimate are only approximations. The GFE serves as a tool for borrowers to compare the estimated costs of different loans from different lenders to ensure that they are getting the best deal and that their mortgage is tailored to meet their individual needs. To protect themselves against any pressure or misleading information from lenders, borrowers should always ask for a GFE as soon as they begin searching for a loan.
Currently, GFEs only apply to reverse mortgages. However, similar loan estimate forms are being used for other home loans. The Consumer Financial Protection Bureau (CFPB) developed the loan estimate form to replace the GFE for new mortgages, such as those associated with a home purchase or refinance. It is similar to the GFE, but more detailed and thus more expensive for lenders to produce.
Borrowers should use the GFE to make sure they are aware of the costs associated with their loan and to ensure they are getting the best deal. It is important to remember, however, that while the terms and costs outlined on the form are estimations, they are not guaranteed. Therefore, it is advisable to shop around and compare multiple estimates before choosing a lender and finalizing the loan.