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Good faith estimate
When applying for a loan, the federal Real Estate Settlement Procedures Act requires that your lender provide you with a good faith estimate of the fees that will be due at closing within three days of applying for a loan. Simply put, a good faith estimate lets you know how much it is going to cost you up-front and long term for a particular mortgage.
Typically closing costs will amount to between 3 and 5 percent of the sale price, so it is a good idea to wait until you receive the good faith estimate before signing a loan. Actually, smart homebuyers will obtain good faith estimate from several lenders to compare their costs. Sometimes, they would use this information to ask their chosen lender to meet or beat the best offer by other competitors. By comparing good faith estimates, you can save hundreds and thousands of dollars over the life of your loan.
It is good to know that for every $1000 that you cannot save on the purchase f your home, it could end up costing you $2,214.67 at 6.25% for 30 years. We all know that it is good to save money, but how should you compare Good Faith Estimates? Keep in mind that not all good faith estimates are treated equally.
A good way to go about comparing good faith estates is by getting them from a variety of lending institutions such as local mortgage companies, national mortgage companies, local banks and credit unions. Good faith estimates from these lending institutions will give you a good average of what it should cost you for your new mortgage.
Some fees are commonly listed on your good faith estimate. These are loan application and credit report, title search and title insurance, lender’s attorney, property appraisal, inspection, survey, document recording, transfer taxes, buyer’s attorney, points and origination, and escrow account balances.
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