Good Faith Estimates - Knowing & Understanding the Power of the paper!!!

Reblogger
Real Estate Agent with Florida Property Experts
Daytona Beach Area Real Estate Reports and Local Events. By Lisa Hill, "THE SMART CHOICE!"

When buying real estate, obtaining a mortgage is frequently a part of the buying process. It's also a part of the process that many real estate buyers know very little about. And unfortunately, as a REALTOR®, in my experience, when I've tried to stress this importance to my real estate buyers, they don't always take me seriously enough (because they don't understand). But yesterday I found a fantastic blog about this exact subject.

Here on Active Rain, there are a few mortgage lenders whom I trust to supply me with accurate mortgage information. They stay abreast of industry changes and alert us to these changes in an unbelievably short period of time! Case in point, the blog post below, regarding Good Faith Estimates!

I was so thrilled to see Jeff's post on this subject... here is the comment I left him  ... "Thank you, thank you, thank you! This is a pet peeve of mine. If a mortgage broker or mortgage lender is too lazy to provide a Good Faith Estimate when it's requested, there's a good chance that that's the kind of service you're going to receive for the entire time period in which they're working for you!"

Lisa Hill Daytona Beach area real estate agent with Adams Cameron Realtors

Adams Cameron and Company Realtors in Ormond Beach FL

Enjoy Jeff's morgage information on Good Faith Estimates below. And if you need to buy real estate in the Daytona Beach area, make a Smart Choice and contact Lisa Hill with Adams Cameron & Co., REALTORS®.

 

Original content by Jeff Belonger

 

 

Good Faith Estimates  - Extremely important message below!!!

 


If you are a consumer looking to purchase or refinance, this is a must read. It could cost you thousands if you don't pay attention. This is not a threat, but a warning from someone that has over 16 years of experience in the mortgage industry.

When shopping for a mortgage, even if shopping with more than 2 lenders, you want to get a good faith estimate from everyone that you speak to.

 

 

Red Flag about good faith estimates

So, here is my pet peeve.  This is a major red flag -  if you speak to a loan officer, on the phone or in person, and they didn't offer you a good faith estimate, don't walk, Run!!!

The Good Faith Estimate is an over abused term and can be misleading. If the loan officer qualifies you for a mortgage, no matter if its a FHA loan or a conventional loan, you should receive one in a few hours. In reality, if the loan officer qualifies you and tells you a rate, a payment, and your total costs, they should be able to give you that good faith estimate in a matter of minutes. Think about it, they had to do this already in order to give you those figures.  There is no excuse. Sure, things happen, but just being busy is not good enough. Unless they specifically tell you that they will give it to you the next day. This can happen, but other than that, if they dont communicate this with you, no excuse. And this could be indicative to how your loan process will go.

Let me ask you this. If you are shopping for a car, don't you want to see your payment, interest rate, and total costs?  I know I would. If you have to keep asking for a good faith estimate and it's been 3 days, major red flag.

 

Overall, it doesn't matter if you are applying for a FHA loan, a conventional loan, or any other type of mortgage.  If you have to beg for a good faith estimate, you are just asking for trouble in most cases.

 

 

 

 

THE GOOD FAITH ESTIMATE

 

Good faith estimates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

So, what is a good faith estimate? Its an estimate of all your costs associated with buying or refinancing your home. But here is the catch. There are some costs that are known costs and not just estimates. These would be the lenders fees. The lender fees are all fees that are under lines 801 to 823. I enlarged this section below for you.

 

good faith estimate section

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three things that you want to look for when you first look at your GFE.

  • Look at the loan program and make sure this is the program that you want. If it was an adjustable, it would say differently.  This would fall under the term of the loan.
  • Look at the mortgage rate. Make sure this is what you discussed when speaking to your loan officer. (Up top, middle of page, yellow highlight)
  • The 3rd issue are the fees. As I mentioned above, everything in section 801 to 823 would be the lenders fees or anything the lender is going to charge you. (left hand column with highlighted items) Don't ever be fooled if one lenders fee is higher than the other. You still need to compare the mortgage rate.

(Speak to your tax accountant to make sure what can be written off and what cant. But typically just the points can be written off)

 

 

What not to do when comparing good faith estimates.

  • Don't compare total fees at bottom of the GFE, which I will explain why below.

 

 

 

 

Conclusion:  Again, don't always shop and ask for total fees. Compare the lenders fees the most. In regards to your escrows, each state is different. I highlighted this in red. Your property taxes are paid either quarterly, twice a year, or once a year. I have seen some loan officers sometimes not show enough for your escrows in regards to the property taxes.  Its very easy for a loan officer to say at closing, ˜these aren't my fees, so all I can do is give an estimate.  Word of advice, yes, its an estimate. But I have seen some loan officers estimate less to make the overall cost look cheaper. And just be careful, because some of these figures are not worth the paper that they are written on. It's just that, an estimate based on good faith. Make sure that you always speak with a Mortgage Professional.  And don't shop yourself right out of the market.

 

One other thing, if you have 3 good faith estimates in front of you, always go back to the person that you had the best feeling with, that you are comfortable the most with, and share the other 2 with them. Just don't run to the person with the best rate and or fees. I always like my clients to come back to me no matter what. I might be able to point something out to them. And this next topic must be discussed when receiving a GFE, otherwise this Good Faith doesn't mean squat.  Locking or floating my mortgage rate !!!!

 

Lastly... if you are going to shop rate & costs, ALWAYS shop on the same day !!!  Rates change daily...

 

 

 

UPDATE :  The laws in some states are different, when a good faith estimate must be given. In Paul McFadden's example, comment #15, they have 3 days from the day they pull credit. According to RESPA, the lender has 3 days from the time of application. When just casually shopping, there is no time period or law.

In regards to my example, with the rate and points, this is just an example. Besides, not all rates or good faith estimates come with points. And I don't charge fees. But there is a cost of doing business with any lender or bank out there.

 

 

 

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Experience & Knowledge at its BEST !!!

 

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger

Comments (5)

Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Thanks for the post. It is very well written and easy to understand.

May 19, 2009 11:14 PM
Fernando Herboso - Broker for Maxus Realty Group
Maxus Realty Group - Broker 301-246-0001 - Gaithersburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

Good information and consumer beware. ..I hate seeing the same practices that got us here still in effect out there.. . 

May 19, 2009 11:21 PM
Thesa Chambers
Fred Real Estate Group - Bend, OR
Principal Broker - Licensed in Oregon

it is funny how sometimes things just happen for a reason - I was just trying to explain the importance to a buyer - so - now I have an easy way to do it... thanks for re-blogging Jeffs post - it helped me and it will help others

May 20, 2009 05:16 PM
Katrina Madewell
Charles Rutenberg Rlty- More than 5,000 agents(813) 777-1196 - Tampa, FL
Tampa FL Homes for sale | Tampa Bay - (813) 777-1196

Lisa the fun part is, as soon as the RESPA reform passes, it will TOTALLY change the whole thing again!!   Bad news is the BANK is lobbying for some of the changes that are trying to make separate rules for themselves (BANKERS), than the rules that Mortgage Brokers must follow.    Thus driving brokers out of the business.

When customer choices are limited, monoplies are created, and prices go up while service levels go down.  THE CONSUMER DOES NOT WIN HERE, ONLY the banks!!

Katrina

May 20, 2009 07:00 PM
Lisa Hill
Florida Property Experts - Daytona Beach, FL
Daytona Beach Real Estate

Thesa- I love having the resources here, that help me explain things too ;-)

Katrina- Sounds like banks are trying to same crap they've been trying for years, to get into the real estate business too. They really think they're above the laws.

May 21, 2009 02:18 PM

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