What Is a GFE for a Mortgage?

A Good Faith Estimate is just one document needed in the mortgage loan process.

The GFE, or Good Faith Estimate, is an outline of all the costs associated with purchasing a new mortgage loan. It lists the loan amount, interest rate, and closing costs of the mortgage debt.

Significance

The Good Faith Estimate is just one document given to the borrower during the mortgage application process to help him make an informed decision on the right mortgage for his situation.

Function

The Good Faith Estimate not only allows a borrower to see exactly what she will be charged in the process but also gives her the information needed to compare two or more loans to procure the best deal.

Time Frame

The initial Good Faith Estimate has to be given to the borrower within three days of receipt of a complete credit application.

Considerations

The initial and final Good Faith Estimate may vary if the circumstances of the loan have changed during the mortgage application process.

Benefits

The new 2010 Good Faith Estimate gives borrowers space on the third page to compare loan options and fees to help provide clarity to a complex financial decision.

References

• Federal Reserve: Understanding the Home Mortgage Process
• HUD: Good Faith Estimate