2010 New Good Faith Estimate

NO MORE CLOSING COSTS SURPRISES! As of January 1, 2010, HUD now requires lenders to use a new Good Faith Estimate form or GFE. This is important for buyers because you should no longer have any closing costs surprises. Buyers should make sure they know how much their mortgage is actually going to cost, and by that I mean not just the interest rate, but all the fees and charges you’ll have to pay to close the loan. Something buyers should consider is whether they want a higher rate and payment for lower closing costs or a lower rate and payment for higher closing costs.

The benefits of of this new GFE is that every lender has to use the same form instead of using their own Good Faith Estimate of Closing Costs, making shopping for lenders much easier to compare; the document spells out in basic terms the purpose of each expense being charged for their loans; mortgage brokers have to show their yield-spread premiums (YSPs) costs, which can have an impact on your rate; borrowers now can compare their original copy of the GFE with the HUD-1 form provided by escrow to see if there have been any changes or not to fees that are allowed to change or not, and mortgage brokers can no longer charge for a mortgage application. Don't be surprised if lenders find a loop around these new regulations. I worked in the mortgage industry for 5 years and nothing surprises me.