Good Faith Estimate

Good Faith Estimate

The Good Faith Estimate (GFE) is a document designed for potential homebuyers, providing essential information about their home loan, including an estimate of the associated costs. This form breaks down key details about the mortgage, such as the interest rate, loan term, and principal balance, enabling borrowers to compare costs and shop for the best financing option.

As of October 3, 2015, the GFE has been replaced by the “Loan Estimate” and “Closing Disclosure Form” for most loan applications. However, individuals who applied for a loan before this date or borrowers with a reverse mortgage will still receive the Good Faith Estimate.

The GFE must be provided within three days of submitting a loan application and includes estimates for various loan fees, escrow amounts paid to third parties, title change charges, and applicable taxes. It also indicates whether there is a rate lock, which ensures you have a specified timeframe to close on the property at the agreed-upon interest rate.

By reviewing and understanding the costs detailed in the Good Faith Estimate, you can make informed financial decisions and hold lenders accountable for the terms they present. This transparency is vital for navigating the homebuying process effectively.

Second Mortgage

Second mortgages are loans secured by property already used as collateral for a home loan. They can be a home equity loan or a home equity line of credit.

Appraisal Fee

The appraisal fee pays the appraiser who evaluates the property’s value you’re buying. The lender uses this report to decide how big of a mortgage you can get.

Annual Income

Your annual income is everything you earn in a year, like wages, salary, tips, bonuses, and overtime. For mortgages, lenders mostly look at wages or salary.

HUD-1 Settlement Statement

HUD-1 Settlement Statement outlined home loan terms but was replaced by the Closing Disclosure form in October 2015 by the Consumer Financial Protection Bureau.

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