The good faith estimate, when it comes to real estate, was developed to lay out the basic terms of a home loan for a home buyer. It was developed as a way for a buyer to contemplate the best loan agreements. To avoid any surprises when buying a home and securing a home loan, it’s important to familiarize yourself with many things, including what you need to know about a good faith estimate.
What You Need to Know About a Good Faith Estimate
Good faith estimates come from the loan officer, designed with the financial details in mind. It includes the terms, costs, and fees connected to the home loan. Interest rates and fees, like the appraisal and title charges, are laid out for review.
These costs can vary as the loan and home-buying process moves forward, but usually these rates will stay close and not vary by more than 10%. Terms should be discussed with the lenders being interviewed, too, so you’re sure that you understand what every part of the good faith estimate means for you.
What is a Good Faith Estimate?
While understanding what a good faith estimate is, it is important to note that your lender will likely use a new estimate layout for your loan and cost analysis. Developed to reduce buyer confusion and paperwork, a loan estimate form is now formulated for your review instead of a good faith estimate.
This newer paperwork is easier to understand and read. It includes the same costs, fees, and terms as a good faith estimate, and makes it easier for a home buyer to compare estimate forms.
When Did Lenders Begin Using Loan Estimate Paperwork?
In 2015, the good faith estimate was mostly phased out for a more consolidated set of documents to enable an easier-to-understand set of terms and fees for customers. This was part of a broader revision of real estate documents that we use today.
Legal documents are often revised over the years to enable greater clarity and fairness for all parties involved. At the same time, you might still come across a good faith estimate in use for certain reverse mortgage loans.
What Information Must Be Disclosed on the Loan Estimate
The loan estimate form is a document that provides an estimate of the loan terms, including the loan amount, interest rate, and type of loan. It will include a breakdown of what the monthly payments will be with the principal, interest, mortgage insurance if required, and estimated escrow involved. Closing costs associated with the loan and home purchase will also be stated here. It’s a vital part of your home-buying paperwork, so don’t be afraid to research the information provided and ask any questions.
Working with an Experienced Memphis Area Real Estate Agent
When it’s time to sell your existing home or buy a great new place, turn to a highly regarded and well-informed local real estate agent. You want someone who you can trust to give you the best advice and know-how for your new home purchase or sale. Check out my other great real estate articles to help you through your home selling and buying experience here in Memphis. Staging homes for sale is also part of my expertise. Please ask me about it when you reach out.
Take a minute to learn more about me. With over 20 years of top-notch service for my clients, I can guide you with your house sale, new home purchase, or buying a great parcel of land. As a top, licensed real estate agent in the Memphis area, showing you the best properties for you and your family is my goal!
Contact me at (901) 828-8919 or drop me a quick note at angie@angiekelley.com and we can speak in person about your plans and options.
