Good Faith Estimates – How They Can Change

Summary

The good faith estimate is what you receive after you apply for a mortgage. Here is what to watch out for.

Good Faith Estimate Basics

A good faith estimate is something that you are required to get within 3 days of a mortgage application.

The good faith estimate is supposed to list an estimate of your mortgage closing costs and your interest rate.

This is only an estimate, and not a written guarantee of fees or interest rates.

Good Faith Estimate Parts

A mortgage can be a complex undertaking – and usually involves multiple parties. This can include a buyer, seller, buyer agent, seller agent, loan officer, notary, escrow agent, title agent, insurance agent, tax filings, etc.

There are many parties involved to make sure the process goes smoothly and is done correctly. The potential for fraud and errors is very high here because of the large amount of dollars involved. This is one of the reasons there are so many safeguards built into the system.

When you receive a good faith estimate from a mortgage lender or broker they often estimate what the third party fees will be. They do not necessarily control these third parties, and third party fees may change over time.

When you receive a good faith estimate make sure that it is thorough.

If the good faith estimate is missing a lot of expenses you may just have a “lowball” estimate that is unrealistic.

If you are going for a “no closing cost” mortgage your closing costs are usually covered in exchange for you paying a higher interest rate.