| WHAT IS A GFE? | | | | be a fun and an exciting time for you and your family |
| A "Good Faith Estimate" (hereinafter, named GFE) is | | | | so take the time you need to find the right loan |
| exactly what the name says. It is an estimate and a | | | | originator and finance company. By the way, loan |
| breakdown of costs for your home purchase. It | | | | officers are legally henceforth called "loan originators." |
| includes, but is not limited to, showing the purchase | | | | CASH-TO-CLOSE WORKSHEET |
| price and your down payment amount, origination fees, | | | | One of the big differences (and you're going to |
| underwriting & processing fees, recording fees, | | | | chuckle when I say this) is that you don't get a GFE |
| title fees and your taxes and insurance associated | | | | anymore. Well...you do....but keep reading because it's |
| with the filing and closing of your home loan. It will also | | | | funny and sad at the same time. I know what you're |
| give you an "estimate" of what money you will need | | | | thinking. "What the heck are you talking about Ari? I |
| to bring at the closing table. | | | | don't get a GFE anymore? Well, simply put...a lender by |
| GUIDELINES CHANGES FOR 2010 | | | | law can no longer give you a GFE "until" you get a |
| The guideline changes in the mortgage lending business | | | | signed contract for the home you wish to purchase. |
| effective January 1, 2010, are massive and will affect | | | | Sounds ridiculous, right? It really is...but that's the rule |
| the way lenders conduct themselves with the public. | | | | book and we've got to learn to play by it. However, |
| Don't dwell on these changes, start fretting and running | | | | before you actually get under contract, and in lieu of a |
| around like Chicken Little because your brains will turn | | | | GFE, your lender will be providing you with a |
| to tapioca after you read this. It's not as bad as it | | | | "Cash-to-Close Worksheet." I don't want you falling off |
| sounds, but it will take some time to adjust to. I will | | | | the deep end here folks. A good lender will be able to |
| need to write several articles on a host of topics to | | | | give you a fairly decent snapshot of what you will |
| cover all the new changes in our industry for 2010, but | | | | need to close, but suffice it to say, they made this |
| this one is just about the GFE. | | | | process more complicated than simplifying it. That's the |
| In many ways these new laws are a welcome relief | | | | sad part. |
| and are designed to save you money, however, most | | | | Just so you know, these changes are industry wide |
| don't see it that way at all. A word of advice here; you | | | | throughout the United States and are mandatory by |
| could really get confused with the numbers especially if | | | | federal law. Anyone giving you a GFE before you are |
| you are dealing with a mortgage broker. With all due | | | | actually supposed to receive one is in violation of that |
| respect to my pals that are mortgage brokers, but you | | | | law. The penalties to the loan originator and the lending |
| could potentially see higher fees on a brokers GFE | | | | institution are severe, however, the guidelines do |
| than a mortgage "banker." A mortgage broker tends | | | | stipulate that once you are under contract, by law, |
| to deal with many different institutions to provide you a | | | | your lender must provide you with that GFE within 3 |
| loan with a host of people "touching" your personal file | | | | days of your application. |
| and private information. | | | | GFE AND FEES |
| Obviously, the more people working or your loan | | | | If you think you haven't heard the best part yet, guess |
| means more money that they must charge you and | | | | what? There's more. Most of the fees associated with |
| higher fees for doing so. A mortgage banker will use | | | | your loan and shown on the GFE will not be broken |
| their own money and in most cases, they have their | | | | down anymore. They will be lumped together. For |
| processing, underwriting and closing department all | | | | example, what you are used to seeing as it pertains to |
| under one roof, thereby saving you money, time and | | | | the lenders origination fee will now show the origination |
| the peace of mind that the security of your personal | | | | fee along with an underwriting fee and probably a |
| and private information is not being sent all over the | | | | processing fee as well. Those three items (or more) |
| country. Trust me...this is the way you want to do | | | | will more than likely be lumped together as one fee. If |
| business when discussing you finances. | | | | you are buying down your interest rate, the GFE will |
| Many of the changes that will take place January 1, | | | | now show what you are spending to get that desired |
| 2010 were written by people who truly didn't think this | | | | rate lowered. Your new rate will also be visible on the |
| through, but it is what it is, and lenders, bankers and | | | | GFE. Be careful here folks. It will be very easy to get |
| brokers alike, will just have to become better at their | | | | very confused if you are comparing a "brokers" GFE |
| craft when explaining these to you, the customer. If | | | | to a mortgage banker. They work completely and |
| you are buying a house for the very first time, you | | | | totally different from one another even though they |
| probably have friends that are helping guide you but in | | | | accomplish the same goal and that is to provide you |
| all earnest, you've probably never seen a GFE. You | | | | with the money to buy your home. A mortgage broker |
| are going to have to trust the lender to tell you | | | | will be disclosing their YSP (Yield Spread Premium) but |
| everything you need to know and how the process | | | | their GFE will also show a box for a "credit" to you. |
| works, what you will need to provide as it pertains to | | | | What you think is a credit to you could possibly still be |
| your documents and what you should expect at | | | | a fee and you need to truly understand what you're |
| closing. If described to you properly, you will get a very | | | | looking at. DO NOT be afraid to ask questions if you |
| good idea of what takes place during this whole | | | | feel the GFE is not being explained to you properly. I |
| process. The experience of buying a home needs to | | | | cannot stress this to you enough. |