Buyers - Have You Seen Your Good Faith Estimate?

I feel the need to write an informational piece on the Good Faith Estimate because too many times buyers come to me with little or even worse, no knowledge of what one is and its importance in the Real Estate transaction.
In short, a GFE is a worksheet provided to the "would be" borrower by their lender/broker which outlines the fees associated with borrowing money, the monthly PIMI, their down payment and estimated prorations. It is used to inform the borrower of how much money they should expect to bring to the closing table.
When a borrower initially applies for a mortgage, they are to be provided with an estimated GFE. Once they get an accepted offer on a property and their lender/broker locks in their rate they should be provided with a Final GFE. It shouldn’t vary greatly from the estimated except where charges were based on a percentage of purchase price, the interest rate and of course fees associated directly with that particular property. This is a requirement and a critical tool for the buyer in the Real Estate transaction. As a REALTOR, I require a copy of the GFE upfront from my clients’ lender/broker so I can be confident I know how much money my client needs to close the transaction and to ensure the accuracy of the HUD-1.
Recently the RESPA Rules were reformed and these changes will be effective Jan. 1, 2010. That may seem a long way off but it’ll be here before you know it. Here are some of the changes that’ll apply if you decide to purchase Real Estate after 1/1/2010.
1. The new GFE will have a summary of key terms of the loan, an estimate of total settlement charges, and an estimate of total settlement costs.
2. Page 3 offers a comparison chart format so a lender/broker can present the borrower with additional loan options (this is not a requirement but as a borrower you can, and should, request it from your lender/broker)
3. Page 2 explains what settlement charges may vary in the HUD-1 and which ones cannot change.
4. The HUD-1 form is redesigned to have the same categories of loan information as the GFE form.
5. The HUD-1 has a table on page 3 that lists the settlement charges as they were on the GFE and as they are on the HUD-1 so that the borrower can easily compare the charges. (There are many other changes to the RESPA rules which can be found on HUD’s website.)
The long and short of it is if you are applying for a mortgage to buy real estate, make sure you receive your GFE from your broker/lender and that you fully understand the figures and how they apply to you and your transaction. If you have any questions regarding GFEs or other Real Estate matters, go to www.jennifermoranfoland.com or call me directly at 702-232-7721.