North Texas Real Estate Blog

Efforts to improve the loan process of your next Southlake TX home have been made effective January 1, 2010, with the introduction of a revised version of the former Good Faith Estimate (GFE) provided to borrowers by their lender. The GFE is an estimate of the costs associated with buying your Southlake home, or wherever your next home may be. The new Good Faith Estimate statement is three pages long, with more detailed information explaining the fees that will be assessed at the closing of your home. Your Southlake TX lender or other local lender will provide this to you when you apply for your home loan. The new GFE is divided into three sections.
The first section provides important dates for you the purchaser. The number of days your interest rate quote is locked in is provided and the date that you must close on your home to avoid an increase in your interest rate. All prepayment penalties, balloon payments, or any possible interest rate increases that may occur during the life of the loan are disclosed in this section of the new GFE statement.
The next section is divided into three categories, all pertaining to which charges may be modified. This provides the borrower information about which charges may or may not be changed between the initial estimate and closing. The sections are: charges that cannot change between initial estimate and closing, charges that cannot increase more than 10 percent aggregate, and charges that may increase at closing. Examples of fees subject to a 10 percent aggregate increase include appraisals, title insurance, and government recording fees. Any one of these fees may increase more than 10 percent , but the sum total of them may not be more than 10 percent of the original estimate. Charges that may change at closing are daily interest and homeowners insurance premiums, which are subject to change if any change in the closing date is made.
The last section of the revised GFE has a section where the borrower can compare costs with up to four other lenders. This provides the opportunity for the borrower to compare their lender with its competitors. These estimates provided by the competition must be made available for up to 10 business days after the inquiry. However, the interest rates are subject to change and are not guaranteed unless and until they are locked in by the lender.
With the new GFE statements, borrowers will be able to make more informed decisions about the cost of financing and hopefully help avoid hidden charges and surprises at the closing table. For more information about the new Good Faith Estimate statement, please contact your local home mortgage consultant.