If you are a buyer out there and you are considering purchasing a home, the first thing you should do is speak with a bank or a loan broker regarding loan qualifications. If you plan to take out a mortgage or refinance your current home or homes, don’t just guess which loan is best for you, you need to know which quotes come with a guarantee and which do not. Remember the purpose of the GFE is to give you an estimate of your settlement charges and loan terms (payments) if you are approved for a loan.

If your loan broker provides you a worksheet as an estimate of your costs, it is almost worthless. It carries no Federal Consumer Protection like a Good Faith Estimate (GFE). A Good Faith Estimate is an estimate of all closing fees including pre-paid and escrow items as well as lender charges. The GFE must be given to the borrower within three days after submission of a loan application.

With GFE’s in the past, your quote may have been low-balled (underestimated on purpose) by hundreds and maybe even thousands of dollars. But beginning Jan 1, 2010, if you get an official GFE, it has to be completely accurate because it falls under the new federal rules – Any significant excesses must come out of the lenders own wallet at settlement.
Also, a loan officer cannot refuse to provide a GFE to any potential borrower who requests one, nor can the loan officer tell the applicants they can only receive a GFE if they commit to moving forward with their company to obtain the mortgage.

So please make sure the document you receive from the bank or loan officer says Good Faith Estimate, not worksheet or estimated settlement costs. And if you don’t receive one-you don’t have a loan.

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