Real Estate --- The good faith estimate
You have recently finished the process of purchasing your brand new
home. In the morning you have the exciting task of picking up the
keys and experiencing the closing process. However, donít get too
excited yet, you should be prepared by following a checklist before
The first thing you should do is check over the good faith estimate.
You will be given one of these to let you know what monies you
should have with you at closing. You will want to go over every line
to make sure the figures are correct. It is time to redo the math to
make sure no mistakes were made. This can happen and so can so many
The good faith estimate is presented to you within three days of
applying for your loan. There are basically three elements on this
document. The loan fees, the interest rate, and the points. It is
the fees which you want to take a close look at when going over this
There are so many fees the lenders charge it is almost scary. You
have the typical loan origination fee. Then you may have a
processing fee, a registration fee, a document preparation fee, and
many more. You can ask for each and every one of these fees to be
discussed, reduced, or even done away with when it comes time to
actually sign the loan paperwork.
The lender will most likely state that this is just company policy
and the fees are normal charges. It is these fees which can cause
catastrophic surprises at the closing table. The good faith estimate
may state your closing fees will only amount to $1,800 or so. When
you get to the table, the fees have jumped to over $2,500.
Unfortunately this happens more and more often these days.
The lender will lock in the interest rate and the points cap to
ensure you will use their services to acquire the loan. In
actuality, it is the lender's fees which should be locked in place.
These are day to day fees which may be necessary to pay and yet do
not vary a great deal over a short period of time. Yet from the time
you apply to the time you close the processing fee went from $150 to
$350. When you ask why you are told that is the fee the bank is now
charging. The question should be why is there a processing fee when
there is a loan origination fee? This is something most buyers will
just assume is a natural thing and choose to pay it to save face. It
is not necessary to do that.
When you speak with a lender, you can ask to have each fee broken
down so you can understand them. Many times when you do this and
start asking questions, the loan officer will adjust the rates and
keep the fees more simple. This will make sure you get the actual
good faith estimate you are supposed to receive. When you are all
done negotiating with your lender, do one other thing. Get it all in
writing. You do not want any more surprises at the closing table. By
making the lender put in writing exactly what they are going to
charge you for each service, and making them list each service
individually, you can save yourself quite a bit of money at the
closing. Money you can spend on the new home you just purchased.
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