By C.L. Haehl
When applying for a mortgage loan, you will receive a Good Faith Estimate (GFE) from each lender you apply with. This is your tool to compare fees and make an informed decision. Here are some tips to help you accurately read the form:
Points and Lender Fees
Near the top of the quote, you will find charges specific to the lender, i.e. origination points, processing fees, credit fees, etc. This is a good place to compare your lenders. If lenders are offering you the same rate, the one with the lowest charges in this area is often the best lender for you.
Taxes and Insurance
Below the lender fees you will find the section that includes your real estate tax and insurance costs. This section also highlights projected prepaid interest. These costs should be the same no matter what lender you choose; therefore, you will want to evaluate how conservative or liberal each lender is with what they are quoting here. This is a section that lenders will often undercut to make their quote seem more competitive.
Title and Miscellaneous Fees
Below the aforementioned tax and insurance quote, you will generally find a quote for title insurance, deed recording, document preparation, transfer tax and other state and local taxes. Although you will likely be told that these fees are fixed costs, many of them are arbitrary depending on what title company handles your settlement. Remember, you have the right to choose a title company with lower fees than the ones quoted by your lender.
You will also want to note the interest rate, term, and whether or not your rate is fixed or adjustable. Remember, you should always obtain more than one estimate, and you should understand that these fees represent “estimates” that are likely to fluctuate some at closing.
Recommended Online Mortgage Lenders – We maintain a list of low rate mortgage lenders and update the list frequently. Try applying with one of our recommended lenders first. Tips For Getting a Mortgage Loan with Bad Credit– Read this article to learn some tips on getting approved for a mortgage loan with bad credit.