GFE–Defined (Good Faith Estimate)

A GFE or Good Faith Estimate is a summary sheet of costs associated with a real estate closing transaction. It is a breakdown of the terms of the loan that someone is offering you and what costs are associated with that offer. This piece of paper should be explained thoroughly by the Mortgage broker you are working with. If every area is not explained at the point of application, this is a time to request one. Also at this point they should be asking you to sign and date the GFE, which basically acknowledges that you have gone over the document thoroughly and understand it and are ready to move forward with a loan. I STRONGLY recommend if all the language and/or numbers confuse you, do not sign it, and seek some help in understanding what your rate of the loan is but also the APR, APR is generally higher than the rate, people tend to interchange the two terms and they are clearly 2 different terms. If someone is promising you the world through the loan or re-fi, this is where the rubber meets the road, it is the document that was set up to make very clear for the consumer and mortgage broker that everyone is on the same page.

Please do not hesitate to contact me if you have questions on what the language or numbers mean, the GFE may differ from lender to lender but they have all the basic parts. The rate, term (length and type), new loan balance, payoff of old balance (if re-fi), Points, which will be another discussion, origination fee and all sorts of other things that are tied into a loan, again you need someone that understands these numbers explaining the numbers and what they mean to you. In predatory lending there can be some pretty creative fees put into loans that sound awfully official and all they are doing is padding their pockets. Again I am not saying all Mortgage brokers do this, but knowledge on the consumer’s part is power, and that is what we need on our side.

If you find a term that you don’t understand, let me know, if I don’t know what it is, I will research and I can do an entry on it so we can all get educated, remember knowledge is power.

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~ by debt2dreams on March 12, 2009.

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