Buying a Home in Salt Lake City, UT

head_left_image

Shopping for a Loan - Understanding the New Good Faith Estimate (GFE) Form

New Good Faith Estimate (GFE) form

Due to RESPA Reform, as of January 1, 2010, lenders are required to use a new, uniform, Good Faith Estimate (GFE) form. This new form creates additional disclosure and transparency about the loan product being offered as well as the costs to the borrower. The Good Faith Estimate (GFE) form is 3 pages in length. All lenders will use the same form. This was not true prior to January 1, 2010.

Once a borrower has provided all the information necessary for a lender or broker to complete a Good Faith Estimate (GFE), the loan originator has 3 business days to deliver a Good Faith Estimate to the borrower. It can be delivered via email if the borrower consents.

Consumers will be able to use the new Good Faith Estimate (GFE) form to more easily compare loan proposals from various lenders.

The new Good Faith Estimate (GFE) form is now more binding on the lender. When I say "more binding," I mean that it IS binding with a few exceptions:

  • Some fees quoted are 100% binding on the lender if certain conditions are met.
  • Some fees quoted are subject to "tolerance levels" (can change up to 10% if certain conditions are met)
  • Some fees are not subject to any cap in the amount they can differ from what is quoted on the Good Faith Estimate (GFE) form.

We will go over, in detail, which fees fall into which category as we go through the Good Faith Estimate (GFE) form. The fees which are not subject to any tolerance cap are usually those where the borrower chooses to use a service not required to close the transaction, or uses a company, for a required service,  other than a company identified by the lender (from which they derived their estimated cost). If the borrower selects one of the companies identified by the lender, or if the lender selects the company for a required service, the lender is bound to the figures quoted with up to a 10% tolerance.

There are 6 pieces of information that have to be on the Good Faith Estimate (GFE) in order for it to be binding on the lender or mortgage broker. They are:

  1. Borrower's Name
  2. Social Security Number
  3. Gross Monthly Income
  4. Property Address
  5. Estimated Property Value
  6. Loan Amount

If any of these pieces of information change during the transaction, the Good Faith Estimate (GFE) is no longer binding and the Lender or Broker will then issue a new Good Faith Estimate within 3 Business days. Anytime a new Good Faith Estimate is prepared, the borrower cannot close on that transaction for another 3 business days after receipt of the new Good Faith Estimate (GFE) form.

The sections, and therefore the numbers quoted, on the new Good Faith Estimate (GFE) form now correspond to identically numbered sections on the Settlement Statement (HUD1 or HUD1A) that the borrower sees at closing.

 

Let's examine these forms, beginning with the Good Faith Estimate (GFE) form, page 1:

 

 

Get an agent on your side when buying a home.  Homebuyer Representation, Inc. - Real estate agents on the Buyer's side!

Comment balloon 3 commentsBenjamin Clark • November 12 2009 12:46AM
Shopping for a Loan - Understanding the New Good Faith Estimate (GFE)…
share
Due to RESPA Reform, as of January 1, 2010, lenders are required to use a new, uniform, Good Faith Estimate (GFE) form This new form creates additional disclosure and transparency about the loan product being offered as well as the costs to… more
Mortgage Shopping Will Soon be a Lot Less Complicated
share
Mortgage shopping will soon be a lot less complicated. RESPA Reform takes effect on January 1, 2010 While still not perfect, the changes do simplify the ability to compare loan offerings between lenders. The goal was to simplify and improve… more
I'm Waving!
share
Thanks to my good friend Rolando Gill, I'm waving! I'm looking to collaborate with NAEBA members and other EBAs and some of my favorite Blogging friends, as well as personal friends and past clients. If you want to wave with me, send me… more
How to "Shop" Loans and Lenders Part 1 of 7 (How to Shop…
share
Many Buyers pay 1-3% too much for their loan in up-front costs, even after "shopping" for lenders. Some choose a lender solely based on which one has the lowest up-front costs, but they end up paying for it by getting an interest rate… more
How to "Shop" Loans and Lenders Part 2 of 7 (Same Day -…
share
Many Buyers pay 1-3% too much for their loan in up-front costs, even after "shopping" for lenders. Some choose a lender solely based on which one has the lowest up-front costs, but they end up paying for it by getting an interest rate… more
How to "Shop" Loans and Lenders Part 3 of 7 (Same Facts)
share
Many Buyers pay 1-3% too much for their loan in up-front costs, even after "shopping" for lenders. Some choose a lender solely based on which one has the lowest up-front costs, but they end up paying for it by getting an interest rate… more
How to "Shop" Loans and Lenders Part 4 of 7 (TOTAL Cost)
share
Many Buyers pay 1-3% too much for their loan in up-front costs, even after "shopping" for lenders. Some choose a lender solely based on which one has the lowest up-front costs, but they end up paying for it by getting an interest rate… more
How to "Shop" Loans and Lenders Part 5 of 7 (Friend/Special…
share
Many Buyers pay 1-3% too much for their loan in up-front costs, even after "shopping" for lenders. Some choose a lender solely based on which one has the lowest up-front costs, but they end up paying for it by getting an interest rate… more
How to "Shop" Loans and Lenders Part 6 of 7 (References)
share
Many Buyers pay 1-3% too much for their loan in up-front costs, even after "shopping" for lenders. Some choose a lender solely based on which one has the lowest up-front costs, but they end up paying for it by getting an interest rate… more
How to "Shop" Loans and Lenders Part 7 of 7 (Extras…
share
Many Buyers pay 1-3% too much for their loan in up-front costs, even after "shopping" for lenders. Some choose a lender solely based on which one has the lowest up-front costs, but they end up paying for it by getting an interest rate… more
You won't be spammed by me.
share
Just a note to all the visitors to my blog and websites. I don't spam. I don't send out email drip campaigns. If you contact me via my website, any response you get will be personally generated by me. If you have excellent credit and… more
Glut of Overpriced Homes Hurts Everyone
share
People who don't really need to sell their home should not put them on the market at ridiculously high prices. Prices don't go up 20% just because Sellers LIST their homes at 120% or more of market value. In order for prices to stabilize and… more
An Exclusive Buyer's Agent is the Only Way to Go
share
I recently transferred to Salt Lake City from California. Having owned a few homes, and also having dealt with various agents in the past, I did not relish the stress and hassles involved in the home buying process. I investigated my options, and… more
Don't Work with a Pushy Real Estate Agent
share
I saw this and realized just how different the experience is for clients of Exclusive Buyer's Agents than it must seem to most of the public who work with pushy real estate agents. British humor and real estate all in one short video clip. &… more
Beware the Bailout Buzzwords
share
Beware the Buzzwords. I had a recent experience with my current mortgage holder that makes me wonder if consumers are accepting "deals" from banks that are not "deals" at all. First, to be clear: I have equity in my… more
How to REALLY Get a Free Credit Report
share
Many "FREE" credit reports turn out to not be so free at all. Some people get charged a processing or handling fee, others get signed up for credit monitoring or other unwanted recurring services. The Federal Trade Commission… more
5 Reasons Utah is Weathering the Economic Storm
share
A recent ABC4 news report points out some reasons why Utah is weathering the economic storm better than other states. Diversification seemed to be the main theme. All of Utah's eggs aren't in one basket. Here are 5 of the examples given: … more
Owning Becomes More Attractive as Rent's Rise, Home Prices and…
share
Demand for rental homes and units in many parts of the country is on the rise as many homeowners who are unable to refinance their mortgages to today's lower rates because their property values have declined have sold their homes "short"… more
How is Earnest Money Applied at Closing?
share
Earnest Money is applied as a credit to you at Settlement. The settlement sheet is basically a balance sheet. The money you owe is on the top of your side (purchase price, closing costs, your portion of property taxes, etc. ) All the money… more
To Refinance or Not to Refinance?
share
Many homeowners are tempted to refinance at interest rates that haven't been this low since the 1970s. Well, should you? Or shouldn't you? The general rule of thumb has been to refinance if you can save more than 1% on the rate (with no… more