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What is a Good Faith Estimate, Anyway?

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It’s always made in good faith, but it’s not really an estimate; it’s held to a higher standard. This is the third part of our nine part series on the loan process.

The Good Faith Estimate (GFE), which you will receive within three business days of applying for your loan, shows closing costs and pre-paid expenses due at closing.

Closing costs include all expenses associated with obtaining the loan, such as lender fees, title insurance, inspections and other charges.

Pre-paid expenses are related to your ongoing cost of homeownership. Examples include reimbursements to the seller for pre-paid taxes; funds to establish your escrow account for taxes and insurance; or a partial month’s interest expense.

Limited adjustments to the GFE are allowed. The “Origination Charges” listed on your GFE cannot change unless there is a “change of circumstance.” In this event, you will receive a new GFE.

Certain fees can increase by no more than 10% at settlement. Examples include government recording charges; title charges from companies we identify; and vendor services we select, such as appraisals and credit reports.

Other charges can change. These include required services that you select from companies we did not identify, such as title services and homeowners insurance. Daily interest charges and the initial deposit into your escrow account to cover taxes and insurance can also change.

If you have questions about GFEs or the mortgage process, please give me a call. I’m happy to help.

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