A few days ago, I ran across an interesting article in the Washington Post about Good Faith Estimates. The article stated "After receiving the disclosure, 56 percent of buyers say they did no comparison shopping among lenders." I decided to answer this common question from first-time homebuyers, "Why is the Good Faith Estimate important?"
What is a Good Faith Estimate (GFE)?
A Good Faith Estimate must be provided by a mortgage lender to a purchaser when completing a mortgage application, as required by the Real Estate Settlement Procedures Act (RESPA). The GFE must include an itemized list of fees and costs associated with the loan and must be provided within three business days of applying for a loan.
What fees are on the GFE?
These mortgage fees, also called settlement costs or closing costs, cover every expense associated with a home loan, pre-paid fees, including inspections, title insurance, taxes and other charges.
Why is the Good Faith Estimate important?
A Good Faith Estimate (GFE) is the best way for first-time homebuyers to compare rates among mortgage lenders. The GFE requires lenders to guarantee their estimates won't increase at closing (ie. limit increase of no more than 10 percent). It is important for homebuyers to make sure they get the best deal available for their home loan.
Hopefully you found this post useful! If you need help finding or selling your Washington DC home, please contact Jason Trotman at 301-452-4767. If you're new to DC, I'd especially like to extend a warm welcome. I value the opportunity to help my clients find the home that meets their needs and provide them with professional, reliable service.