The official name of the form for a loan cost breakdown is the “Good Faith Estimate of Closing Costs.” It will show you what interest rate and fees will be charged for your loan and will help you compare with the other lenders you may interview. Not all lenders charge the same interest rates and fees so the good faith will help when comparing.
As of January 2010, lenders are required to use a new standardized good faith estimate of closing costs. This is a form that will show you the up front charges (closing costs) and the prepaid expenses. The new good faith estimate (AKA a G.F.E.) was designed to better inform the borrowers what kind of loan they are applying for and make it easier to compare different loans and lenders’ charges. Unfortunately, it has fallen short in a few ways. The new G.F.E. does not tell you what your total payment will be – P.I.T.I. + M.I. Nor does it tell you the total cost of getting a home loan (closing costs, prepaid expenses, and down payment). You will need a separate cost itemization and payment breakdown to get the full picture in detail. The good news is that the new G.F.E. forces lenders to be more accurate as to their true charges. This will help at closing time, as lenders can’t surprise you with higher fees and interest rates at the last minute.
SECRET REVEALED – The “New” Good Faith Estimate will help you compare lender charges.
As Excerpted From "Home Buying Secrets Revealed" By Kenn Renner, Copyright 2010 "All Rights Reserved" www.BuyHomeBuyingSecrets.Com - 512-423-5626 - www.BuyAustin.Com
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