The Basics of Good Faith Estimates:
- Good faith estimates are required to receive within three days of a mortgage application.
- The Good Faith estimate is meant to list an estimate of mortgage closing costs and interest rate.
- The Good faith estimate is simply that; an estimate. It is not a written guarantee of either fees, or interest rates.
The Parts of a Good Faith Estimate:
- Mortgages tend to be complex undertakings, and therefore can and usually do involve multiple parties, including a buyer, seller, buyer agent, seller agent, loan officer, escrow agent, notary, title agend, insurance agent, tax filings, etc.
- There are many involved parties that are there to make sure the process goes as smoothly as possible, and is done correctly. The potential for errors and fraud is very high in the mortgage market because of the large amount of money involved. This is one of the reasons why so many safe guards are built into the system.
- When a good faith estimate is received from a mortgage lender or broker, third party fees are often estimated. The lender or broker does not necessarily control these third parties, and the fees may end up changing over time.
- Make sure that any received good faith estimate is thorough.
- If the estimate you received appears to be missing a great amount of expenses, consider this an unrealistic “lowball” estimate.
- If applying for a “no closing cost” mortgage, the closing costs are actually covered in exchange for a higher interest rate.
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