The recent announcement from Housing and Urban Development that the Good Faith Estimate (GFE) form will be overhauled veered my thoughts toward the current GFE and how potential buyers use it. It seems that a lot of buyers are not sure what a GFE is or how it can help in comparing loans. Basically, the estimate outlines fees-in addition to the interest-that will be included in your mortgage. Many of these are due at closing. The Good Faith Estimate is exactly what its title suggests-an estimate-so unless your lender agrees to "lock" your rates, then they could all change by the time you make a move. However, you can still see how different companies will rate you and offer you different loan packages.

A new GFE format has been ordered because the current format is not especially user-friendly. Most consumers find the current estimate form difficult to understand and decipher. Unfortunately, the new, easier to understand GFE will not be officially required until 2010, so if you are looking at loans now, that won't help you. But where a GFE will primarily help you is to understand the general amount you will be responsible for at closing.

Many people are blindsided by this number and don't take it into consideration when thinking how much of a down payment they have available. When you receive your estimates, have your potential lenders go over the document line by line with you. Additionally, you can talk to your real estate agent about the different estimates you receive. I like to sit down with my clients and help them understand the ins and outs of buying a new home and taking out a mortgage.

Bottom Line: Don't disregard your Good Faith Estimate, but remember that the numbers are likely to change in the end. And remember to ask plenty of questions-buying a home is a major step in your life!