WHAT IS A GFE?

A “good faith estimate” (hereinafter referred to as GFE) is exactly what the name says. It is an estimate and breakdown of the costs of purchasing your home. Includes, but is not limited to, displaying the purchase price and amount of your down payment, origination fees, underwriting and processing fees, registration fees, title fees, and your taxes and insurance associated with filing and closing of your mortgage loan. It will also give you an “estimate” of how much money you’ll need to bring to the closing table.

GUIDELINE CHANGES FOR 2010

The changes in guidelines in the mortgage lending business effective January 1, 2010 are massive and will affect how lenders deal with the public. Don’t dwell on these changes, start worrying and running like Chicken Little because your brain will go tapioca after reading this. It’s not as bad as it sounds, but it will take some time to adjust. I’ll have to write several articles on a number of topics to cover all the new changes in our industry for 2010, but this one is just about the GFE.

In many ways, these new laws are a welcome relief and are designed to save you money, yet most don’t see it that way. A tip here; You could really get confused by the numbers, especially if you’re dealing with a mortgage broker. With all due respect to my friends who are mortgage brokers, but you may see higher rates at a GFE broker than at a mortgage “banker.” A mortgage broker tends to deal with many different institutions to get him a loan with a large number of people “touching” his personal file and private information.

Obviously, the more people who work or your loan means the more money they have to collect from you and the higher fees for doing so. A mortgage banker will use their own money and, in most cases, have their processing, underwriting, and closing departments under one roof, saving you money, time, and the peace of mind that your personal information is safe. and privacy is not being compromised. it is felt throughout the country. Trust me… this is the way you want to do business when you talk about your finances.

Many of the changes that will take place on January 1, 2010 were written by people who didn’t really think about it, but it is what it is, and lenders, bankers and brokers alike will have to get better at their craft when explaining it to you, the client. If you’re a first-time homebuyer, you probably have friends to help guide you, but seriously, you’ve probably never seen a GFE. You’ll need to trust the lender to tell you everything you need to know about how the process works, what you’ll need to provide regarding your documents, and what to expect at closing. If you are described correctly, you will get a very good idea of ​​what happens during this whole process. The home buying experience should be a fun and exciting time for you and your family, so take the time you need to find the right loan originator and finance company. By the way, from now on, loan officers are legally called “loan originators.”

CLOSING CASH SPREADSHEET

One of the big differences (and you’re going to laugh when I say this) is that you no longer get a GFE. Well… you do… but read on because it’s funny and sad at the same time. I know what you’re thinking. “What the hell are you talking about, Ari? Am I no longer getting a GFE? Well, long story short…a lender by law can no longer give you a GFE ‘until’ you get a signed contract for the home you want for buy. Sounds ridiculous, right? It really is… but that’s the rule book and we have to learn to play by it. However, before you actually get a contract, and instead of a GFE, your lender will provide you with a “Cash to Close Worksheet” I don’t want you to fall off the deep end here folks a good lender will be able to give you a pretty decent snapshot of what you’ll need to close but suffice it to say they made this process more complicated than simple .

For your information, these changes apply to the entire industry in the United States and are required by federal law. Anyone who gives you a GFE before you are supposed to receive one is breaking that law. The penalties for the loan originator and lender are severe, however the guidelines state that once you are under contract, by law your lender must provide you with that GFE within 3 days of your request.

GFE AND RATES

If you think you haven’t heard the best part yet, guess what? There is more. Most of the fees associated with your loan and shown on the GFE will no longer be itemized. They will be grouped. For example, what you are used to seeing when it comes to origination fee from lenders will now show the origination fee along with an underwriting fee and probably a processing fee as well. Those three (or more) items will most likely be bundled together as one rate. If you’re shopping low on your interest rate, the GFE will now show what you’re spending to lower your desired rate. Your new rate will also be visible in the GFE. Be careful here friends. It will be very easy to get very confused if you are comparing a “brokers” GFE to a mortgage banker. They work completely and totally different from each other even though they serve the same goal and that is to provide you with the money to buy your home. A mortgage broker will disclose your YSP (yield margin premium), but your GFE will also display a box for a “credit” to you. What you think is a credit to you could still be a fee and you need to really understand what you’re looking at. Do NOT be afraid to ask questions if you think the GFE is not being explained to you correctly. I can’t stress this enough.

As I told you before, don’t be scared. If you know what a GFE is and have seen one before, you’ll have a general idea. If you haven’t seen one before, it will be new to you and hopefully it will still be a fun and happy experience. Happy house hunting and thanks for reading.