Use of Good Faith Estimate in Mortgage Rate Quote Comparison
Good Faith Estimate discloses the mortgage terms in detail to a prospective mortgage applicant. This document includes the rate, how long is the rate guaranteed for, what are the fees and closing costs. This estimate must significantly match the final terms. Although by law mortgage lenders do not have to provide this information until the rate is locked or an application has been made, many do provide it upon request.
Mortgage search should start with quote gathering. Prospective applicant could get online, get a few rate quotes and come up with a short list of 3 or 4 offers. This could be done very fast and easily with some sites offering up to 4 quotes from different lenders. After mortgage search is completed and several rate offers have been short listed, the next thing to do is to get GFE from those selected lenders. This will allow the applicants compare the rates, fees and other costs like for like. This may suddenly move your third choice lender to first position. Fees and costs play important part in deciding who is offering the best mortgage product after all.
Changes in the property appraisal, applicant‘s credit score, job or other important details require a new GFE. What really counts is the final GFE. The fees and costs quoted on that must match the final figures charged or final rate applied to the mortgage.
Some lenders or mortgage officers are concerned that their applicants’ will use this document to shop around and negotiate with other lenders. However, the information on this document is needed to have a proper comparison. It is not trade secrets; it is only the outline of their quote offer. Some lenders may only guarantee the rates for a short period of time, but GFE will still be useful in comparing the quotes.
Some lenders may only offer mortgage worksheet. This document does not oblige the lender match the figures when the mortgage complete. If the Good Faith Estimate is not readily available make use of worksheet. If changes made to the terms along the way enquire with the loan officer or broker. The changes may in fact be positive as well.
Should the lender or loan officer not be fortcoming with these informations either in the form of worksheet or GFE, you should probably walk away. They may be hoping that you will be drawn to a low mortgage rate offer and overlook high fees and costs.
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