A Good Faith Estimate, also known as GFE, is the document that explains the cost and terms of a mortgage.  Applicants will receive a GFE within three days of an application which is required by law. This document is very important when you are doing mortgage comparisons and it will help you better understand your loan.

The first page of the GFE includes a summary of the mortgage disclosing information such as: the GFE date, GFE expiration date, the loan size, the loan term, the interest rate, and monthly principle and interest obligations. The first page will also list whether an escrow account was included and or needed. An escrow account is an account held by the lender that will contain the funds used to pay the tax or insurance on a property. You will also find the estimate of your closing costs on the first page which is further explained on the second page.

The second page of the Good Faith Estimate breaks down the settlement costs which includes closing costs. The first charge listed is the origination fee which comprises of all lender related charges including processing and underwriting fees. Other fees listed in this section may include: discount points, appraisal fees, taxes, insurance, pre-paid mortgage interest, etc.

The last page of the GFE further explains all the information on pages one and two. Mortgage rates and settlement costs can change from lender to lender. For a free mortgage analysis don’t hesitate to contact me, I am always looking for ways my clients can save money.