I know this – my buyer clients will appreciate being able to compare Good Faith Estimates from lenders on “apples-to-apples†forms … And make it easier for me to help them identify junk fees.
If you’re thinking about buying a house in 2010, the following are two forms with which you will become well-accustomed.
Read more at HUD’s site, and take a look at these PDFs – the New Good Faith Estimate and the New HUD-1 form for Borrowers.
Get this – the new Good Faith Estimate (GFE) – actually explains things. Here is an example … financially it is usually better for buyers to close near the end of the month due to the daily interest. The GFE explains this on page 2:
10. Daily interest charges This charge is for the daily interest on your loan from the day of your settlement until the first day of the next month or the first day of your normal mortgage payment cycle. This amount is __ $ per day for __ days (if your settlement is __)
More from Rhonda Porter at Rain City Guide.
Even more from Rhonda –
Good Faith Estimate and more.
Simply put, it doesn’t matter what anyone thinks about these forms. They’re here and we need to understand them.
The new Good Faith Estimate (GFE) is now a standard form across all lenders. In the past a borrower would receive a GFE with a different format from each lender that they visited —- each having a slightly different set of disclosed loan terms, or vocabulary for referencing such terms. Now, a buyer can compare two proposed mortgage scenarios from two different lenders and be able to quickly and easily compare the exact same terms from each. I see this as a huge improvement for the financing process (for buyers), as in the past there has often been much confusion about how to determine which proposed loan program is better than the other.
Hopefully this will make things a little more simple … but I’m sure there are plenty of unintended consequences we’ll discover by mid-2010. (Like this one pointed out by Rhonda Porter:)
The new Good Faith Estimate may wind up being a huge set back for independent escrow companies and smaller independent title agencies who will most likely lose any relationships they have forged with loan originators who happen to work for one of the big banks.
By the way, if you are planning on selecting your escrow and/or title provider. You may want to start researching prior to your prequalification process with the mortgage originator. You may find that effective January 1, 2010 most mortgage originators will not want to pr