In my previous post, I touched on some new lending regulations and the standardized Good Faith Estimate for San Mateo home buyers from HUD to help minimize the confusion of different forms. HUD’s goal was to ensure lenders quote realistic fees, help avoid last minute closing cost surprises and help the home buyer make an apples to apples comparison between loan products.
What Does the New GFE Look Like?
Below you will find a blank copy of the new 3 page Good Faith Estimate (GFE) that all lenders must supply within 3 days of application after you have an accepted contract.
Where are the Lender’s Fees and Costs shown on the New GFE?
Below are a few key items for home buyers to understand at on the new Good Faith Estimate.
Fees Paid to Lender from Borrower – Cannot Change at Closing
All fees paid to the lender/broker from the borrower are consolidated on Block A Page 1 and will also show on Section 1 Page 2. These fees cannot change unless the loan program or the terms of the loan change. These fees include processing fees, underwriting fees, appraisal fees, document preparation fees, loan origination fees and other pertinent fees to close the loan.
Title and Escrow Fees to Record Your Loan – Can Be No More than 10% Off
The estimates for government recording charges (state/local fees to record your loan and title documents) and third party service providers such as title and escrow services that the lender recommends to a borrower will be itemized in Section B. The amount you pay at closing can be no more than 10% difference than what was originally quoted to you if you use the recommended service provider. If the estimated charges exceed the 10% threshold, the lender is responsible to make up the difference. If you choose your own Title and Escrow Company, the lender is not responsible for the difference.
What Fees Can Change without Penalty to the Lender?
The estimates for services that the buyer chooses on their own can change without any penalty to the lender. These fees can be:
- Title and escrow charges (if you decide to use a company not recommended to you by the lender)
- Initial escrow deposit
- Pre-paid interest (determined by the day of the month you close)
- Homeowner’s insurance
These fees are reflected on lines 4,5,6, 9, 10, 11 and are also consolidated in Section B
Paying Points to Lower Your Interest Rate?
If you have decided to pay points (remember one point is 1% of the loan amount) to lower your interest rate, all of the fees will be itemized on Section 2 Page 2 so the borrower can compare to other loan programs.
Chart to Explain Fees and Costs on the New GFE
| These charges cannot increase at closing | The total of these charges can increase up to 10% at closing | These charges can change at closing |
|---|---|---|
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Need Help Interpreting the New GFE?
Call me at (650) 520-0915 or email me at info@SanMateoMortgageBlog.com to schedule a no obligation consultation to determine how I may be able to help you get a San Mateo mortgage loan. If you’re currently working with another lender, I’d be happy to give you a second opinion and help you understand if you’ve chosen the right loan program and are getting the best rate.
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