What Is A Good Faith Estimate In Mortgage Lending?

Posted on: 5 May 2017

If buying a house is something you are about to do for the first time and you receive a Good Faith Estimate (GFE) from your lender, you may wonder what this is and what it is for. A GFE is something that is commonly used in mortgage lending; however, many lenders now call this a Loan Estimate. Here are several things you should know about this statement and what it is for.

What it is

A GFE, or Loan Estimate, is a form your lender will give you after you are approved for a mortgage. This statement will reveal to you a lot of important details about the loan you are approved for, and here are some of the things it should state:

Loan type – The form will tell you what type of loan program the loan is, and this could be a conventional loan, FHA loan, VA loan, or another type.
Interest rate and length of loan – It should also state important details about the loan, including the interest rate you will pay and the number of payments you will need to make.
Dates – The form should also tell you how long the loan offer will be valid. This is important if you want to get locked in at a certain interest rate. If so, you will need to make sure you close on the loan by a certain date.
Closing costs – The other important detail the form will state is the amount of closing costs you must pay. This section should be broken down by the types of fees and amount per type. You might see fees listed as loan origination charges, title insurance, and escrow deposits. These fees are all estimated, but they are typically very close to the actual charges you will end up having to pay.

There may be other types of information on the GFE as well, but these are the most important details to look at.

What it is for

The GFE you receive is a very important document, and you can use it for several purposes. The first is simply to know how much the loan will cost you if you take it. The second thing you can do with this is compare it to other offers you have with lenders. By comparing several GFEs, you will have the opportunity to find the best loan for your needs.

If you are ready to apply for a loan, contact a lender like FCN Bank. If you are approved, you will receive a form like this, and you will now know what it is and how to use it.

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