How To Use A Good Faith Estimate When Shopping For A Mortgage

By:Terry Parker

When shopping for a loan many people focus on the interest rate or the APR. This is indeed a very important part of the loan. But only by comparing the Good Faith Estimate provided by a lender can you determine if they are really giving you a good deal or if they are trying to take you for a ride around the block. This article shows how to use the Good Faith Estimate to scrutinize and compare lenders and get the best loan.

Within three days after applying for a loan the lender must provide you in person or in the mail a completed Good Faith Estimate. This is a form that represents an estimate of the fees and costs of necessary items to successfully process and close your mortgage loan. These items include points and other fees. This is a long form that is divided into six different categories. These categories are numbered 800, 900, 1000, 1100, 1200, and 1300. The real key to understanding if you are getting a good deal is to focus on the section that relates directly to the lender.

Sections 900 through 1300 all relate to third party charges and the lender has no control over these. These sections may include items such as appraisal, insurance, impounds, recording fees, transfer fees, title charges, attorney fees, inspection fees and settlement fees. Now you may notice that these fees vary between lenders. This is because the lender is the one that prepares the Good Faith Estimate and prints it for you. The lender puts estimates here based on what these items typically cost. They have no control over items in these sections so disregard comparing these when comparing lenders. These can all be categorized as non lender costs and fees. Although some lenders may try to trick you by giving low figures for the third party fees to make their Good Faith Estimate look better. By doing this their total closing costs and fees may look much lower on paper. Make sure the third party charges look reasonable. You can always call third parties and inquire about what the usual charges are to check this.

Basically section 800 includes all the items associated with the lender. These are the charges and fees that relate directly to the loan and here is where to compare lenders. This is where you should really focus and review items to make comparisons. This section may include administration fees, application fees, document preparation fees, funding fees, mortgage broker fees, processing fees, underwriting fees, wire transfer fees and any other garbage or junk fees that a lender might be charging. This is where they can really add on the extra padding.

With the ability to add on many types of fees it is crucial to look at everything and not just focus on the interest rate. Unfortunately, loans have several different parts. These can be altered to make one part look more attractive if necessary. A lender can make any part of the loan attractive if they feel that is what is really important to you. For example, one lender may offer a $300,000 loan a half point lower but may have $3,000 or one point worth of fees added in the Good Faith Estimate. So be sure to look at the total picture to really see which lender has the best offer for you and also make sure they have accurately quoted third party fees. Remember, by lowering third party fees it will make their Good Faith Estimate look better on paper. Also, be sure to compare the loan interest rate and the lender charges together to see which is really the best deal. Remember, it never hurts to ask a lender if they will reduce or eliminate charges if you feel they are too high.

Digg del.icio.us Blink Stumble Spurl Reddit Netscape Furl

Article keywords: mortgage, good faith estimate, loan

Article Source: http://www.articles2k.com

San Diego Mortgage Lender Broker Rates Loans. site provides readers with free informative articles about mortgages and real estate. Visit our site for all your mortgage needs.

Top Mortgage Articles
1). Home Loan Center – Does The Type Of Lender Impact The Type Of Mortgage You Can Get? By : Dean Shainin While deciding on the right lender, one should address the following questions: Does it really matter where you get your first mortgage? What is the difference between different types of lenders, and how does that impact on the mortgage you can get?
2). Mortgage Refinancing Below 500 FICO By : Tristan Hunt If you have been turned down for a mortgage refinance, especially a cash out or debt consolidation refinance, because your lender says your credit score is under 500, there are a variety of new options and strategies available which can help you get the cash you need now to pay off your credit card debts, collection accounts, and other derogatory or poor credit accounts and improve your FICO credit score to the point where you can qualify for a low interest, fixed rate loan.
3). Mortgage & Refinance Tips: Determining Your Income By : Tristan Hunt When you apply for a refinance, debt consolidation or purchase mortgage, one of the most important factors in qualifying for the loan is your income. That may not seem like much of a surprise, but you may be surprised at all of the different ways your income can be calculated based on how well you can document it, and how much this can affect your loan process.
4). Mortgage Terms and Definitions By : Dan Lewis The mortgage process can be a little confusing if you aren't familiar with the terms used in the process. To help you out, here is a list of terms with corresponding mortgage definitions. Broker: An independent mortgage professional that oversees the entire home loan process. Lender: The business entity providing and funding the home loan. Processor: Prepares your loan for underwriting.
5). Is Your Subprime Mortgage Lender A Predatory Lender By : Subprime lenders offer financing for people with low credit scores who don’t qualify for a conventional loan. Subprime financing can be offered through traditional mortgage lenders like banks, credit unions, or mortgage lenders. There are also specialized lenders who only deal with subprime mortgages. Predatory lenders charge high fees, write loans in vague terms, and structure payments so they can foreclose on property.
6). Make the Most of Your Mortgage Leads By : Jay If you are a loan officer or mortgage broker and you invest in mortgage leads, or you are considering investing in mortgage leads, make sure you are making the most of them. A lead provider, if they are a good one, can provide you with a good quality lead, the rest is up to you. The lead provider has no control over what the potential customer might say.
7). Fha Mortgage Loans - The Benefits Of An FHA Mortgage By : Carrie Reeder The Federal Housing Administration (FHA) insures mortgages to allow low to moderate income families to purchase their own home. With government backing, families can buy a home at a lower initial cost. However, there are limitations with this program. Mortgage Insurance – Section 203(b) The FHA provides mortgage insurance, not mortgage loans to families.
8). Use A Mortgage Calculator To Guide Your Home Equity Loan Decision By : Gerald Mason The difference between a home loan and a home equity loan lies mainly in that the home equity loan, also known as a second or even third mortgage, is issued at a higher interest rate. This interest rate is lower than you could expect to pay on a credit card, but it will be still higher than the original interest rate. Use a home equity mortgage calculator to see what releasing different percentages of your equity makes to the payments required.
9). Fixed Rate Mortgage Loans - Understanding The Basics By : Carrie Reeder Fixed rate mortgages are the most common type of mortgage loan for home buyers. With predictable payments, long term homeowners can plan their budgets and guard against rising interest rates. But a fixed rate mortgage is not for everyone with its higher interest rates and a reduction in your buying power. Fixed Rate Mortgage Features A fixed rate mortgage features set rates, long term low monthly payments, and low risk.
10). FHA Home Mortgage Purchase Or Refinance Loan - Why You Might Consider Getting An FHA Loan By : Carrie Reeder Most borrowers have heard of FHA home loans. They are very common. You hear about them mostly as loans for first time borrowers, which is common. However, most people don't realize that FHA loans can also be does for refinancing. They are not only for purchasing a house. HUD owns and operates FHA, which is a program designed to help borrowers who might have difficulty buying a house.

New Mortgage Articles
1). Getting a Mortgage Approval By : MITCHELL HAMPSON Looking to get approved for your very first home mortgage? Here are the tips that you need to have for sure fire approval
2). Deciding on Whether a Reverse Mortgage is For You By : Search For Classes Many seniors want to enjoy their golden years, but are unable to find a way to increase their monthly income or decrease enough of their monthly expenditures in order to retire at an age that will afford them the opportunity to do so. One way to circumvent this problem is through obtaining a reverse mortgage. A reverse mortgage enables homeowners older than sixty two years of age to convert the equity in their homes into tax-free income while they continue to reside at their property.
3). The Basics of Reverse Mortgages By : Search For Classes Reverse mortgages are loans against your home that require no repayment for as long as you live there. As opposed to regular mortgage loans, reverse mortgages have no income requirements and are based solely on the equity of your home or condo. There are no monthly payments to make as the mortgage is due only when the borrower is no longer living at the residence.
4). When Will Ben Bernanke Blink? Is the Federal Reserve’s Rate Raising Fight Against Inflation Going Too Far? By : Sydney Jackson There is a lot of speculation and debate among economists about whether the Federal Reserve will raise the Fed’s short term interest rate to 5% in their meeting on Wednesday. If they do, it will make 16 straight jumps of .25%, since it reached it’s low point of 1%. Most people seem to feel that statements by Fed Chairman Ben Bernanke have sent mixed signals about whether or not this meeting will be the time for a pause.
5). Remortgages: The Helps and Hazards By : James Smiths When you remortgage you home you, just as the name you imply, get a new mortgage that replaces the existing one. This is usually something that takes place when the market interest rates drop down below what you are paying. Most often this is something that is considered by homeowners who hold fixed rate mortgages. The Helps Remortgaging can be helpful in quite a few different ways.
6). Buying To Let: Is It For You? By : James Smiths If you read the title of this article and thought to yourself, "Let what? What am I letting happen buy buying? And what am I buying?", than this article is definitely for you. First let me establish that the "buy" refers to a house and second, the "let" part, that refers to renting that house out to someone else. Basically it means that you buy a house and let someone else pay the mortgage and live in it.
7). Mortgage and their debts By : devi Purchasing a house has been a vision for many. But it is impossible for an average man to possess a huge sum of ready cash to procure the property; the only remedy here is, going for mortgages. Mortgage can be defined as a loan which will provide monetary help to purchase any real estate property. The borrower can make his payments regularly to the lender.
8). UK mortgage and remortgage deals By : Groshan Fabiola Mortgage is a way of securing a debt by using your own property as a guarantee to the lender. If For some reason you cannot pay your debt in time you may lose the property. The term mortgage itself refers to the debt and also to the legal device used when securing the property. In the countries where properties are highly demanded and the prices are quite elevated, there are strong loan and mortgage markets.
9). Getting the right mortgage By : john Selecting a mortgage can be a difficult task. First of all, you need to decide which mortgage would suit your needs best. For those who want to know what their monthly outgoings are going to be, should look at a fixed rate mortgage, as these are mortgages that are set at a fixed price for a certain period, which can be anything from 1 year to 5 years.
10). Cheap Mortgage Rate By : Danny Wirken Must-Ask Questions When You Get Your Mortgage Whether you're buying a house or refinancing, there is more to a mortgage than the rate. Here are eight questions to ask while mortgage shopping. You'll have to ask yourself some of these questions; others can only be answered by mortgage professionals and insurers. How long do I plan to stay in the house? That's often a hard question to answer.