A GFE is a Good Faith Estimate. It is a form that estimates what charges and loan terms you can expect if you are approved for that specific loan.
Lenders are required by law to give you a GFE within three businesses days of receiving your loan application. (The GFE must be mailed or hand delivered by the end of the third business day.)
Some of the fees outlined on a GFE are covered by the buyer and some are covered by the seller.
As the name would suggest, the numbers are an estimate. They can fluctuate up to 10 percent in either direction. Because of this potential increase, it’s important you hold on to your GFE. This will allow you to compare the estimated fees against the actual fees.
What Fees Should You Expect on a GFE?
Application Fee: Your application fee is the processing charge you pay when you submit your loan. In some cases this fee is rolled into other fees.
Appraisal Fee: To ensure the home you are purchasing is worth the value of the loan, an independent third party is hired to appraise the home’s value. It is important to note this is not the same as a home inspection.
Credit Report Fee: Some, but not all, lenders will charge you to check your credit history from one or all of the three major national credit bureaus: Equifax, Experian and TransUnion.
Discount and Origination Points: In some cases, discount points can be purchased to lower the interest rate on your loan.
Escrow Account: While your escrow account isn’t a fee, it is an account which holds potential payments such as earnest money, homeowner’s insurance, private mortgage insurance, and property taxes.
Attorney Fees: Legal documents must be prepared and reviewed by a lawyer for your loan to close. In some cases the seller will pay for the attorney’s time. In other cases the buyer will be responsible for covering this fee.
Survey Fee: In order to officially define the property’s boundaries, the property must be surveyed.
How Accurate Are GFE’s typically?
Third-party fees have a tendency to fluctuate because the lender isn’t in control of these. However, the lender’s fees are typically more accurate because they have a better grasp of their own overhead.
Have additional questions about GFEs? Contact me today and I’d be happy to help you out.