New Good Faith Estimate

“I’M APPLYING FOR A LOAN AND MY LOAN OFFICER SAID THAT THE GOOD FAITH ESTIMATE IS NOW STANDARDIZED AND IS DIFFERENT THAN THE OLD GOOD FAITH ESTIMATE. HOW IS IT DIFFERENT? IS THERE ANYTHING I NEED TO KNOW ABOUT THE NEW FORM?”

Effective January 1 2010, the new “Good Faith Estimate” (GFE) provides additional information and disclosure about the particular loan and its associated costs. Here are a few of the features of the new estimate form:

•   Important Dates: How long the terms of the loan and the rate lock are valid.
•   Summary: Lists the term, rate, adjustability, prepayment penalties, etc.
•   Escrow Account: Information and an explanation of escrow.
•   Origination Charges: Lists fees charged directly by the lender.
•   Other Settlement Charges: Identifying any third party fees.
•   Instructions: Which charges cannot increase and limits for charges that may.

On the last page of the Good Faith Estimate, two sections—the Trade-Off Table and the Shopping Cart—allow the applicant to compare not only different cost options for the loan product (paying points in exchange for a lower interest rate), but also different lenders. Although the new GFE does not cover all areas (such as complete payment or cash required at closing), it can be a helpful tool in the lending process. ∆