Line 902 *Mortgage Insurance Premium
This is the PMI or MI paid in advance.
Line 903 Hazard Insurance Premium
This is the first year's cost of your home owners policy. This fee will be what it will be, it's better if this estimate is high.
Line 905 *VA Funding Fee
Fee charged by the VA.
All lines in the 1000 series are to establish escrow/impound account and should not be compared between lenders they will be what they will be, only the PMI/MI on line 1002 can be known at the time of the disclosure. It's better if this estimate is high.
Escrow/impound accounts are required on conforming loans over 80% loan to value, and are common on all loans. I would distrust anyone who gives you a low estimate to reduce the estimated total cost.
At the bottom Right is the "Estimated Monthly Payment" If you are making comparisons check only the "Principal & Intrust" and the "Mortgage Insurance," PMI/MI, because all the other numbers are estimates and will be what ever they are with what ever lender finances the property.
* These items will be labeled "PFC" for "Prepaid Finance Charges" You don't pay them until closing the label refers to items used to determine the "APR" listed on the "Truth In Lending" form.
The "Good Faith Estimate" was supposed to let you compare loans, but it doesn't work! To compare two or more estimates you first must go through those items that can't be controlled and either subtract them from the total or adjust them to the highest number (this is a better method.)
Estimates can vary between originators simply because they are estimates or because one or more originators wants to appear less expensive!
Lines to look at are: line 812, 1101 (If you are buying a new house, the builder/subdivider will have a contract with the escrow company for a low cost closing, you will get the discount with an outside lender but they will originally estimate a much higher fee), 1106, 1107, 1108, 1201, 1202, 1203, 1302, 901 (this is the big one), 902, 903, ( for the 1000 sears charges use the total cost because lender could use the same cost but for fewer months distorting the total) 1001, 1002, 1003, 1004, 1005.
Now that you've adjusted the variables out of the estimates compare them again, if there is a major difference confront the originators there is a reason for any major difference. It's necessary to ask each for an estimate at the same rate, conforming loans are available in 1/8% increments over a 2% range. Talk to your originator.
Compare apples to apples! If an originator is quoting you his best conforming rate and someone else quotes a non-conforming loan ask why, It makes no sense to get turned down for a great loan when you could have a good loan!
This is eddied copyrighted material from "Get The Money / A Consumers Guide To A Successful Mortgage Application" republished here by the author with permission of the publisher. Watch for"Truth In Lending."
Bill
William J Archambault Jr
The Real Estate Investment Institute
http://www.reii.org
Links:
Part 1Good Faith Estimate Part 1
/blogsview/44523/Good-Faith-Estimate-Part
Part 2 Good Faith Estimate Part 2
Part 3Good Faith Estimate Part 3
Part 4
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Get The Money
A Consumers Guide To A Successful Mortgage Application
William J Archambault Jr
author of:
One House At A Time / Finding And Buying Single Family Rentals
Flipping For Fun And Profit
A Baker's Dozen / A Real Estate Anthology
Available from:
The Real Estate Investment Institute
http://www.reii.org wja@reii.org