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The Good Faith Estimate
The Good Faith Estimate
The good faith estimate is a document that must be provided to any borrower in the United States that has completed a loan application or has made an inquiry for credit to obtain a mortgage. The loan document estimates and itemizes all costs involved with the mortgage transaction. The document is provided to the borrower by the lender. The lender can be either a bank, mortgage bank, or mortgage broker. The good faith estimate is required to be sent to the applicant within three business days of the initial mortgage application.
The good faith estimate serves as a wonderful tool to compare mortgage offers. The charges that you may incur during a mortgage transaction are listed below:
The fees you might find on the Good Faith Estimate are categorized as follows:
800 ITEMS PAYABLE IN CONNECTION WITH LOAN:
This fee is the upfront cost, typically expressed as a percentage of the loan amount, charged to originate the loan. It is a basic service fee.
This is an upfront cost paid to the lender to obtain a lower interest rate.
This fee covers the cost of the property inspection to determine the market value of the subject property.
This is the cost of the credit report
This is the lender’s cost of inspecting a property – often associated with construction loans.
This is the upfront fee a broker might charge and is usually considered a "junk" fee.
This fee covers the cost of tax collection reporting for mortgages where the taxes are escrowed.
This is the charge for processing the loan which includes any information collection and reporting needed to fund the mortgage.
This fee is paid to the lender for examining the loan file for approval or denial.
The wire fee covers the cost of wiring money from lender to title/escrow. 900 ITEMS REQUIRED BY LENDER TO BE PAID IN ADVANCE
This is your prepaid interest for your mortgage loan calculating from the day of funding to the end of the month.
This is the prepaid mortgage insurance premium, if you have one.
The property/hazard insurance fee required to be paid upfront in a purchase transaction.
The funding fee for a VA loan. 1000 RESERVES DEPOSITED WITH LENDER
This is any prepayment of your future hazard insurance expense when escrowing those costs. It is a cushion.
This is any prepayment of your future mortgage insurance expense.
This is any prepayment of your future school tax expense.
This is any prepayment of your future tax expenses, such as property taxes
This is any prepayment of your future flood insurance expense 1100 TITLE CHARGES
This is the cost of escrow. This is the service of a neutral party that actually handles the money between all the different parties in a real estate transaction, including: the lender, the buyer, the seller, the agents, notary, etc. This is often done by the “Title Company” – a related entity in the same office that provides title insurance
This is the charge for preparing the loan documents. Lenders often email the loan documents to the escrow company, which in turn prints them out and reviews them before signing
This is the cost of the notary. This is to have all of the legal documents surrounding this transaction notarized
Any legal charges
This is the cost of insuring the title of the property. If there is a question about title (who really owned the property), after the transaction is done then this insurance protects the lender from future problems 1200 GOVERNMENT RECORDING & TRANSFER CHARGES
This is the cost of updating relevant government records
Unavoidable government charge
Unavoidable government charge 1300 ADDITIONAL SETTLEMENT CHARGES
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