A lot of times clients ask us for a Good Faith Estimate upfront… the latest rules regarding good faith estimates (which can be a great way to compare loan costs after escrow is opened… but not compare actual loan types…) require lenders to quote the escrow and title fees as well as other third party fees ( fees not having to do with or controlled by the lender ) accurately on the estimate… well, that is impossible ( like many government regulations that are enacted and don’t have any real practical application ). If you are a client and you are doing the right thing… setting up your loan so you are a more attractive buyer at the offer stage … and you would like to know upfront what costs are associated with your loan the best way to do this is to ask a series of questions to the lending source… see below…
Property type ( condo, townhome, house, duplex)?
Down payment amount
Type of loan ( ie, 30 year fixed)?
Days of rate lock?
Middle Credit score of both borrowers?
Total lenders fes (including appraisal)
With this information, the lender can accurately tell you what their rate would be at that time on this deal. With this information you can compare apples to apples as the saying goes… no hidden costs or loan differentials… the good faith estimate really does not differentiate between a 30 year fixed and a five year fixed as far as the APR goes… so that is misleading… it also, as stated above, forces the lender into quoting third party fees ( like escrow and title) that they have no control over… so that really doesn’t do anyone any good. The good faith estimate is best delivered after escrow has opened on a purchase and the fees are defined for all parties… also, after a borrower has accurately compared loan products and understands the basics of the loan they are applying for… ie, 30 year fixed… five year fixed etc…. this is the time when you are formally applying for a loan and therefor when a good faith estimate is due.. On a refinance, the good faith estimate is delivered once we have a complete loan file from the client…( loan application, signed authorization forms and borrowers complete personal financials).
A good faith estimate is it is not a rate lock committent or a loan approval.. that is important to remember. it is governemrnet from to try and compare loans ( and it doesn't do it very well).
So we ask our clients right up front to do their due diligence on the loan, the type, the rate, the cost… compare lenders…. interview them over the phone or in person… find the lender that best fits your needs, your personality… that is referred to you by someone you trust… once you have found that lender, we ask you work with them solely to pre approve your loan, then once in escrow, to fund your loan. It is a tremendous amount of work for both the borrower and the lender to do all of this…we are going to work tirelessly to take care of you and your loan… so we want to make sure if you choose us, we are the lender that funds your loan in the end.