A good faith estimate
or a GFE must be provided to a customer by a broker or a mortgage lender as has
been laid down by the Real Estate Settlement Procedures Act (RESPA). The
estimate includes a list of costs and fees associated with the loan that has
been sanctioned by the bank to the customer. The good faith estimate must be
handed out to the customer within three business working days of applying for
the loan. The good faith estimate in a way is a comparison of the different
quotes on lending amounts by various banks across the nation. The GFE is now a
necessary document to be handed out in the USA.
The GFE, one must
remember is only an estimate of the various mortgage costs and processing fees
that are included within the list. Actual figures thereby can vary from the
ones mentioned in the estimate. However the difference between the mentioned
costs and the costs entailed cannot be larger than 10%. The fee structure of
the GFE is basically an estimate based on six broad categories. They are the
loan fees, advance fees, charges on title, reserve balances, charges of the
government and additional charges incurred.
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