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Estimating Costs in Good Faith
-- By Pushpa Sathish, Staff Writer
Applying for a loan or a refinance on your current mortgage is bound to leave you buried under a mound of paperwork. One important document that you should receive from your lender within three days of your loan application is the GFE or Good Faith Estimate. This paper, which lists the costs that are associated with your loan such as lender origination fees, attorney closing fees, appraisal fees, costs associated with title insurance, taxes, and other related charges.
The document is just an estimate, and the costs listed may vary from the time the paperwork was started to the time the deal is closed. You can get your lender to clarify any discrepancies that arise in the costs actually incurred and those listed in the GFE. Normally, some costs that are constrained by time are bound to change if the time taken to close the deal is a long period.
A GFE lists costs that are related to the closing of the transactions, and does not detail expenses that are incurred and paid for before the application.
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When preparing to apply for a cash out refinance, order a mortgage payoff letter first from your existing lender. Your new mortgage loan officer will base all of the estimates on the payoff figure you give him. If you only provide the principal balance, you'll be short. The payoff will include interest owed, prepayment penalties or late fees - any charges that may have accumulated that are off your radar. Your new mortgage loan officer can use this more reliable figure to prepare the Good Faith Estimate and avoid a possible last minute surprise.
Posted by: Diane Cipa, General Manager, The Closing Specialists® | Dec 16, 2006 9:52:31 AM
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