New Good Faith Estimates

Starting Jan. 1st mortgage lenders were required to begin issuing new “good faith estimates” to applicants covering loan fees and settlement charges. The idea is to eliminate some of the most controversial practices in home mortgages- the intentional or inadvertent underestimation of fees (or also known as the bait & switch.)

Now the lender fees must be identical from application to closing with only 10% wiggle room.  If the costs are outside of the 10% tolerance area then closing will have to be extended. The buyer will be issued a new GFE and will need to approve of the new costs.

The way lenders are getting around these new rules is by offering worksheets at the time of application instead of a real Good Faith Estimate.  These worksheets give buyers scenarios of costs but do not have to be near what the real costs will be at closing.

If you are a serious buyer and you want to compare lenders costs; ask for the Good Faith Estimate. That way the lender can’t bait and switch you!