Good Faith Estimates -- Knowing the basics - A must read !!!

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Good Faith Estimates -- Such an extremely vital part when shopping for a mortgage. Yes, rate is some what important, but seems to be the primary focus so many times. Not to sound rude or out of character, but a monkey can quote a rate. And I am dead serious about this.

For any of you in the process of buying a home or refinancing your current mortgage, this is a must read.

I have been in the mortgage industry for over 16 years and this subject has to be my biggest pet peeve out there. I have written about this a few times, which you can read below.

Basic information to look for when shopping for a good faith estimate.........
  1. Only compare the lenders fees, which are located on lines 800 to 820. Don't compare total fees at the bottom. Part of the reason? Go to # 3. And because some loan officers undercut title insurance fees and other 3rd party fees. Yes, it happens.
  2. Do not compare good faith estimates and the truth-in-lending disclosure (TIL) that shows the APR. It's very easy to manipulate the APR. Lenders can leave out certain fees.
  3. Beware of what property taxes the loan officer uses for properties that you are looking at. And make sure that they escrow the correct amount on your good faith estimate, which is on lines 1003 & 1004.
  4. Here is my biggest pet peeve !!!!!  You should be given a good faith estimate once your loan officer qualifies you. When your loan officer pulls your credit, takes down your income information, and is able to come back to you with a purchase price, with rate and payment, you are now qualified. If this is the case, they should be able to give you a good faith estimate (GFE) right there and then. Okay, so you called them up. Most of us have e-mail and that loan officer should be able to e-mail you a copy. It doesn't take no longer than 24 hours, no matter how busy they are. Don't allow them to use this as an excuse. And if it takes them 2 days to get you a GFE?  Don't even use their services, no matter what. Not unless they tell you when you will be getting one. Things do happen. But the key thing to remember is if you are qualified to buy a property or to refinance, then you should get one within a half hour. People, your information is already in the system. That is the only way to qualify you. Then next step is just to e-mail it to you. That SIMPLE....
  5. One last major point.....  as Lenn Harley mentioned in a comment, you need to obtain all the good faith estimates on the same day. Just one day could make a huge difference. Especially in taoday's market, with rates changing drastically within 24 to 48 hours at times.  You just don't want to shop yourself out of the market.

2 quick stories.......
  --  I have a client right now that is looking to buy a home in Maryland. They first went to Countrywide and was pre-qualified for a home of $250,000. I asked them what payment that they didn't want to go over and they said $2,000 a month. I also asked them what the taxes were on the properties that they were looking at in that range. They said $3,400 to $4,200, so I bumped it up $100 extra per year.
They found me online from a few of my blogs. I work in New Jersey and don't know their area well, but I know what questions to ask, as you can see above. The other lender?  She is using taxes of $2,400 a year. I was even shown the GFE. OUCH. You know what, these buyers qualify very easily. But in my worst case scenario, the payment difference is going to be by $150 a month. And you know what, most of the taxes are about $4,100/month. And this lender is local....  There are a few points in this story. A very good loan officer doesn't have to be local. And a very good loan officer needs to ask the right questions, besides knowing how to qualify.

  --  2nd story....  I met a couple two days ago who settled on their home a year ago. It was even a referral from a friend. This loan officer had them bring $2,500 more to settlement, the day of settlement. This is a totally different pet peeve and different subject, which I will write about later. But word to the wise, this is called bait and switch. If your loan officer changes your rate and or costs at the very end, typically the day before or the day of, don't sign the papers if there is a huge difference. Don't let anyone force you to sign, even a lawyer. The only thing that you could lose at that moment is your deposit. But let me tell you something, if you have the right documents, you can take them to court and win in most courses. This is if they won't come back down to what was originally offered. Why can I say this? If anything is ever changed prior to settlement, the lender is suppose to get you to sign a new good faith estimate.

Overall.... choose your mortgage professional wisely and not just based on a great good faith estimate.

FYI.......   If a loan officer doesn't volunteer a good faith estimate right when they qualify you for a mortgage... or it takes longer than 24 hours.... then the loan officer in most cases does't want you to see their good faith estimate. It's sad to say, but usually so true. Don't let anyone tell you differently. They don't want you to compare apples to apples. And in all honesty, why should you give them the benefit of the doubt or even consideration still... no matter how nice they sound. It could cost you money in the long run. WALK AWAY....

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Copyright © 2008 by Jeff Belonger

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Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc

Comments (67)

Barry Brackin
United Country-Brackin Real Estate - Demopolis, AL

A very good real. I would like to share this with my customers. May I Re-Blog with proper credits?

Oct 13, 2008 01:18 PM
Jennifer Hartwick
Crane and Crane Real Estate - Columbia, MO

Great information!  I'm going through a refi myself and waited over two weeks for GFE and approval  because underwriting was "backed up"  I wish I would have read your information sooner!  I would have insisted!

Oct 13, 2008 01:58 PM
Thomas Tolbert
Better Homes and Gardens® Real Estate Legacy - Savannah, GA

Valuable information Jeff.  Thanks!

Oct 13, 2008 02:17 PM
Tom Kim
Kay Kim Realty - Suwanee, GA


  If the APR includes fees paid by the borrower into the equation, then why does the APR change from the rate if the seller pays all those fees?

Oct 13, 2008 04:21 PM
Renee Files
REMAX Town & Country - Canton, GA

Great information! thanks



Oct 13, 2008 10:34 PM
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Savvy Realtor - Ann Arbor Real Estate

Jeff, I am always surprised when a lender doesn't give a GFE to potential customers. Unfortunately most don't know to ask for one, so they are in the dark until we ask them to fax it to us. Thanks for posting the importance of this.

Oct 13, 2008 11:57 PM
Pam Dent
Gayle Harvey Real Estate, Inc. - Charlottesville, VA
REALTOR® - Charlottesville Virginia Homes / Horse

Jeff - This is an excellent post.  A lot of important information very clearly stated.  I particularly find the part about getting all of the estimates on the same day very important. 

Oct 14, 2008 12:36 AM
Wil Nordbruch
CFL Mortgage - Greensboro, NC

Jeff- I couldn't agree with you more!  I got into this business at a very tumultuous time, and have quickly learned how to stand out from the competition.  Educating your borrowers is of the utmost importance (I think back to my first home purchase and wish I would have been more informed).  The company I work with has gone one step further and created materials we give to each client to educate them more on the entire mortgage process. 

I agree with you as well, Jeff, about providing the Real Estate Agent with a copy of the GFE.  This is a fine line to walk, and I ask the borrowers to provide their agent with a copy if they wish to.  People, especially now, are very particular about who knows what when it comes to their money.

-Wil Nordbruch

Oct 14, 2008 01:38 AM
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans


JENNIFER......  if any advise that buyers should get, this should be #1 and not just because I wrote about it.  And yes, a day can make a difference, especially in the last 30 days.

BRENDA...... apples to apples is so key. And as I mentioned, it should not be the overall bottom number, but the lenders fees and the rate and that's it... in regards to that other comment, I deleted it. thanks


NEAL...... I hear from consumers often that they never received one. But between you, me, and the fence post... if the borrower signed an application, they signed a GFE.  Did they get a copy?  Probably not. But... the borrower could have made a copy of the GFE themselves. If the borrower meets the loan officer in their office, ask them to make a copy. It the application is sent out to the borrower, make a copy before sending back.  It's a RESPA law, that the lender needs to make sure that the borrower has a GFE 3 days after the application date, no later than.

On another note, there are many consumers that shop with a loan officer, who never give then a GFE. Now, there is no law in that. But I use it to my advantage, when speaking to a consumer that was never given a GFE and it's been 3 days or longer. I tell the borrower that the loan officer has something to hide. You need to see your down payment, your mortgage payment, and all costs. It's sad and scary, but I use it to my advantage.  thanks


LISA S. ...... that comment is BS... I don't get paid on a loan unless I close that loan. In order to get to that point, I need to provide good service upfront and a reasonable GFE with costs...  those loan officers will be out of business as business slows down. But we need to educate the average consumer and keep writing about this.


TIM.....  bingo, hence why I wrote about this again. I try to write this same type of blog about every 4 months. I think I will write about it once a month now. It might be boring to some, but we need to educate the consumer. Hence again, why I wrote this. I had a prospective client who has shopped with 2 other lenders, get a GFE from a major lender. This loan officer used property taxes of $150 per month less than what I used. And what I used was very accurate. I asked the borrower in regards to what properties they were interested in and what those taxes where. Another sad thing about that?  I am out of state and that loan officer is in the buyers same state. Not to sound full of myself, but I think I have the deal. The borrower called me again last night at 7:58 pm to ask a few questions. I can sense she is happy with me.

RON......  in all honesty, as I mentioned to Neal in my comment above you, I love comparing the GFE, if the borrower listens to me. Many do... I have had a few give the other loan officer the benefit of the doubt, even without receiving anything for 4 days, saying that they must be busy... LOL   Sorry, even if I am swamped, there is no excuse, if you qualified the borrower. Very sad, but again, I use it to my benefit.  Read my comment to Tim, right above you. In that case, the other loan officer was $150 per month short on their property taxes... OUCH... but I pointed this out and that borrower will not be using the other loan officers services. And thanks for the polite compliment.


KAREN......   my pleasure and thanks for the kind words... and for reblogging this. This is one issue that we need to get out into the masses. The other issue, that there is still mortgage money to lend.

DIANE....... then you have always been using the wrong loan officers. Not for nothing, next time, I would be glad to help... or at least offer you what I could do for you or your clients. I am licensed in SC.  thanks


Oct 14, 2008 01:49 AM
Tim Monciref - Austin, TX
Over 2,000 homes sold…..

Thanks for the blog.  Any agent that does not get a good faith estimate from the different lenders is just a liable as the lender.  There is almost no way to compare lender estimates without a good faith estimate as it is the easiest business to scam people.  If you are an agent and are involved with the lack of producing a good faith are asking to get sued.  So the lender will get sued and fined, but agents, cover you tails and do your fiduciary responsibility.

Oct 14, 2008 05:37 AM
Kelsey Barklow
Hurd Realty - Johnson City, TN

Thank you so much for this information. Several years ago, before I became a Realtor, I was refinancing my home loan and didn't see a GFE until I was signing the closing documents in front of a notary. The lender's fees were outrageous so I cancelled the loan within the 3 day period. I reported the lender to RESPA and complained to the lender directly but never heard back from either. I will never do business via L.T. again (found on the Internet) and I always advise my clients to choose their lender carefully, as you suggest.

Oct 15, 2008 07:22 AM
Gerry Suarez Jr.
Jet Home Loans NMLS 1660135 - Maitland, FL
FL Mortgage Guru

Wow, great post Jeff!

and it so hits home! Just today I did a GFE for a customer that will be using another lender but called me to make sure they were being treated fairly. I gave him my GFE just for informational purposes, which I feel any lender should be willing to do.

Also, thanks for highlighting where other lenders under-disclose estimates. I'm sure I lose so much business because I refuse to under-disclose taxes and insurance. Our customers need to realize lenders have no control over most of the items quoted in a GFE, so a higher cost GFE can often just be the sign of a responsible lender!

Gerry Suarez, Jr.

Your FHA Loan Pro!

Oct 15, 2008 09:22 AM
Winter Baserva
Seasons Realty Group of Atlanta Communities - Atlanta, GA
Realtor -Homes For Sale, Atlanta, GA

Great tips for my clients. Thank you.

Oct 20, 2008 03:25 AM
Esko Kiuru
Bethesda, MD


GFE can be very confusing to an untrained eye but as long as the borrower focuses on the 800 lines he'll get a solid idea what a mortgage lender is charging. That's where it's at.

Oct 25, 2008 04:33 PM
Jack Climer
Jack Climer Realty, LLC - Springfield, MO

This ever gets old to post. Thanks for the reminder.

Oct 27, 2008 09:24 AM
Karen Cox
Landmark Professional Mortgage Company - Salem, OR

Excellent!  Thank you for reminding home buyers the importance of being able to trust your loan officer! - Karen Cox, Landmark Mortgage, Salem, OR.

Nov 17, 2008 04:35 AM
Marie LaVoise, CENTURY 21 Platinum Properties
CENTURY 21 Platinum Properties - Clarksville, TN

Jeff, Good post and very to the point. Thank you.

Nov 17, 2008 09:49 AM
Greg Wilson
1st Cornerstone Realty - Schaumburg, IL

Jeff, thanks for the post.  Its always good to read other people's experiences when it comes to loans.

Nov 23, 2008 11:53 PM
Joseph Banske
Cherry Creek Mortgage - Waukesha, WI

an oldie but a goodie

Feb 05, 2009 06:25 AM
Laura Moore Godek
Laura Moore Godek, PC - McHenry, IL

I represent Buyers at closings all the time who either were not given a GFE or did not know they were given a GFE.

Feb 12, 2009 12:33 PM