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NEW GFE effective Jan 1

By
Mortgage and Lending with Absolute Mortgage

Have you looked at the new Good Faith Estimate yet?  Well I would encourage you to.  Starting January 1st lenders are required to use a new GFE.  It is a three page document now, not just one.  It does spell out quite well what the closing costs are and what they are for.  There will be some confusion with this document though.  To start with there is nowhere to see what the total monthly payment is.  It does show principle and interest, but not the total payment with the MI, Taxes or Insurance.  It also does not show how much money for the borrowers have to bring to close, the down payment is not included anywhere on the form.  If the loan happens to be FHA, VA or USDA and there is a funding fee, it shows that as a closing cost.  In most cases that fee is funded into the loan and is typically not an "out of pocket" expense. 

On the first page it talks about how long the GFE is good for and how long the interest rate is available for.  This is what a competent mortgage advisor is for.  We watch the market, the bonds, the candlestick patterns and upcoming events to best advise the client on when they will be able to capture the best rates.  I realize that not all lenders are advisors and do not take the time to do the background research. The document also does not cover the "suitability" of the loan for the client.  If the borrower is just getting out of college and plans to only live there two to three years is a 30 YR fixed rate the best option for that client?  How about the borrowers that have 20% down but little reserves after that point and they have children that will be entering college in the next 3-5 years?  Is the 20% down a prudent move?  I think not.  So use a trusted Mortgage Advisor that can explain the document and one who actually understands where the borrowers stand in life and is able to determine which product best fits their needs. 

Jerry Wright

Mortgage Advisor

 

Comments (1)

Rob & Jeannie Steward - Realtors®
RE/MAX Advantage - Nashville, TN
We Work TWICE As Hard For You! - Ashton Group

There is a title company we use which is doing a presentation on the new GFE. We will attend to stave off confusion. Stave off hunger too since they're feeding us.   :-)

Dec 23, 2009 10:23 AM