Good Faith Estimate (GFE) – What is It?
Posted on | March 14, 2009 | No Comments
The Real Estate Settlement Procedures Act (RESPA) of 1974 states that when you file an application for a loan the lender must provide a good faith estimate (GFE) of closing costs. It is customary that the lender will give you the estimate before you leave upon completing your application, but by law they have three business days to provide the estimate. If your lender does not provide the good faith estimate within three business days, find a new lender.
The good faith estimate is based on the lender’s experience of the local costs involved in completing a mortgage. The estimate can be a flat dollar amount or a range, but the form must be concise. It is your right as a borrower to question any estimate on the GSE form. If you feel these costs are not reasonable, you need to find another lender and start the good faith estimate process with them.
Make sure to realize that closing costs change on a daily basis. A few days prior to closing, it is advisable to check with your lender to get a new estimate on how much the closing costs will be. There are lenders that are providing little or no closing costs, but make sure to do your research before choosing one of these lenders. They need to have a strong balance sheet and a quality reputation before you even consider applying for a mortgage with these no-cost lenders.
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