In this article, we will be discussing what a Good Faith Estimate is (GFE), who provides it and what it means. The average person does not know what a GFE is and too often think that they are “mandatory” charges by the bank. If you look at a GFE, you will see there are also Title Insurance charges on it. These charges, unlike popular belief, are not mandatory charges. In fact, nearly almost every charge on your GFE are all estimates, hence the name Good Faith Estimate.

Here is a link to what the standard GFE looks like blank: http://www.hud.gov/offices/hsg/ramh/res/gfestimate.pdf.

A GFE can be a confusing document especially to the average person. Even though they have explanations on most of the GFE, it still looks like a bunch of numbers and charges and just more headaches that the burrower has to deal with. Your GFE should be considered your Bible of closing costs. On your GFE, it lists all the fees you will be charges at closing as accurately that the lender can. It also gives you your loan terms prior to approval of the loan.

A GFE is provided to you when involving both a Purchase and a Refinance transaction. The only time a GFE is not provided to a homebuyer, is if it is an all cash transaction because there is no lender, and only lenders provide a GFE.  At that point it is up to your attorney to provide you with estimated closing costs. The GFE is broken down into 3 pages, the next 3 articles, Part III, Part IV and Part V will take each page and break them down specifically so you, the reader, can understand what a GFE is and why a GFE is important to you as a consumer in helping you find the best deal you can on a loan and with Title Insurance.

The GFE is a tool that the state requires ALL lenders that are licensed by the state or federal banking and insurance departments to give to their potential clients. A GFE is pretty much a big, complicated, and confusing quote. The closing costs in a transaction can either make or break a person’s decision to purchase or refinance their home. Typically, closing costs are covered in the loan that is given to the burrower by the lender, depending on which lender and terms that the lender and burrower agreed too.

The most important thing to know about your GFE is that it is in fact an estimate and is subject to some change. The new HUD regulation allows for change to some areas and does not allow other areas to change in your GFE. It is given in good faith to prepare the burrower for what fees they will have to pay either out of pocket or through the note that the lender is providing. We will be discussing what variants make the GFE subject to change in later articles. Stay tuned in this series for further knowledge.

That concludes the 2nd article in this 8 part series. If you are interested in getting a free quote please visit our website at www.mytitledirect.comor desire to talk about your transaction, we could be contacted by either a Bold Chat with a live representative on our website, an email to vgavrity@titleguarantee.com or even a phone call with a live representative at (516-222-2444). We will answer any questions you may have.