Good Faith Estimate (GFE)
gud - fayth - es.tɪ.meɪt
A Good Faith Estimate (GFE) is a document provided by a mortgage lender to a borrower during the early stages of the mortgage application process. It outlines the estimated costs associated with obtaining a mortgage loan. The purpose of the GFE is to help borrowers understand and compare the various fees and charges they may encounter when securing a mortgage.
The GFE typically includes information such as:
Loan terms: This includes the loan amount, interest rate, and any points or fees associated with the loan.
Closing costs: These are the fees and charges that the borrower is expected to pay at the closing of the loan. Closing costs may include fees for services such as appraisal, title insurance, origination, and escrow.
Estimated monthly payments: The GFE may provide an estimate of the borrower’s monthly mortgage payments, including principal, interest, taxes, and insurance (PITI).
Escrow account information: If the borrower will be required to establish an escrow account for the payment of property taxes and insurance, the GFE will detail the estimated amounts that will be deposited into the escrow account.
The GFE is intended to provide borrowers with transparency and clarity regarding the costs associated with their mortgage loan. It helps borrowers compare loan offers from different lenders and understand the financial implications of their mortgage choices. However, it’s important to note that the GFE is only an estimate, and actual costs may vary at closing. In 2015, the Good Faith Estimate was replaced by the Loan Estimate form as part of the TILA-RESPA Integrated Disclosure (TRID) rule.
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