What is a GFE?
GFE or Good Faith Estimate is a federally regulated document which details the anticipated costs related to a specific loan you've been offered. The costs listed on the GFE typically include the lender's origination fee, points (if any), escrow or attorney's closing fees, title insurance, appraisal fee, and various other taxes and expenses. The exact list will vary from one state to another.
Here's a list of some of the fees you'll find listed on your good-faith estimate.
Origination Fees
- Discount
- Property appraisal
- Credit report
- Lender's inspection
- Mortgage insurance application
- Assumption
- Mortgage broker fee
- Tax-related service fee
- Application
- Commitment
- Rate lock
- Processing
- Underwriting
- Wire transfer
Settlement, Closing or Escrow Fees
- Abstract or title search
- Title examination
- Document preparation
- Notary
- Attorney
- Title insurance
- Recording
- City/county tax stamps
- Transfer tax
- Survey
- Condominium application
- Prepaids for interest, hazard insurance, property taxes, mortgage insurance and flood insurance
Closing costs typically amount to between 3 percent and 5 percent of the sale price.
Why the GFE is your best friend
Even though the GFE is only an estimate, it can be a useful aid to comparison shop among loan products from different lenders. Smart shoppers obtain good-faith estimates from two or more lenders, compare their costs and ask questions about any large discrepancies. Be sure to compare the estimated costs for the same type of loan product.
The 3 Day Requirement
Your lender is required by the Federal Real Estate Settlement Procedures Act to provide you with a good-faith estimate of the fees due at the closing. This document, called the good-faith estimate, or GFE, is supposed to be provided to you within three days of applying for a loan.
Additional GFE Info
An example GFE (PDF) from FAHE.org
Another example GFE (PDF)
Blank GFE (PDF) from HUD.gov
MORE MORTGAGE & LOAN ARTICLES...
- LOAN LIMITS FOR RESIDENTIAL HOME LOANS
- MORTGAGE BROKER VERSUS RETAIL BANKER
- HOME LOAN PRE-QUALIFICATION VS. PRE-APPROVAL
- TYPES OF PREPAYMENT PENALTIES
- NO CLOSING COST LOAN, HOW IS THIS POSSIBLE?
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