What should you be looking at on your GFE (Good Faith Estimate)?

The Good Faith Estimate (GFE) is a very important tool when you are getting a mortgage.

The GFE comes after your loan officer took an application (1003) and found you a mortgage program for your needs.

Always take the time to read everything on your GFE. Some lines are very important and if you are not sure, ask questions.

At the top of your GFE, make sure your subject property address is right, your name, the term of the loan (is it 15 years (180 months) or 30 years (3660 months))and the base amount.

There are many lines on the GFE and they are all numbered. Let's talk about a few of them:

801: Loan origination fee: This is the fee a direct lender may charge you to do the loan. It is not discount points to get a better rate; it is out of the pocket expense from you to pay the lender and / or the loan officer. Make sure it is clear how much they charge you depending on your credit score (FICO score). Better credit score = less origination points.

802: Loan discount fee: This is the line where you pay points to get a better rate. I just want to remind you to calculate if it is better for you to do it or not. I wrote an article called: "Should I buy discount points on my next refinance?" That article is available on this site. Don't get mixed up with origination fee or broker fee. Brokers are always using the phrase "Discount Points to lower your rate" while in fact those fees are at line 808 of the GFE.

803: Appraisal fee. Is it paid outside closing by you? Then you will see a P and the price will not be on the line. It's paid by the lender then make sure you are not paying it!

810: Processing Fee: This is what the broker or lender will charge you to process the mortgage. DO you have to pay it? Good question! You have to look into all the fees you pay and see where you can negotiate a little bit. If you pay 2 points or more (OUCH!) you shouldn't pay any processing fee or go get another lender! Let your loan officer know that!

You will have to pay for title insurance (every time you refinance), courier, closing fee from the closing agent, recording fee... These are third party fees when you work with a broker. If you work with your bank, you will probably not see those fees or less of those.

901: Make sure the prepaid interest is right with the exact number of days.

1001 and 1004: If you escrow, then make sure the number of months are right.

Triple check the Transaction Summary: Principal and Interest paid every month, taxes and insurance and at the bottom the Total Closing costs. Are they right? Are they what you were told?

By the way, it is normal if they are not exactly what you were told. They will change once the lender put the right amount in there. Just follow up on your GFE. Don't forget, it is a GOOD FAITH Estimate! Good Faith!

Enjoy!