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Previewing The New Good Faith Estimate

Posted By Paula Henry on Sunday, December 06, 2009 2:42:00 PM | 5 Comments

The new Good Faith Estimate makes its debut January 1, 2010. The new format will make it easier for Indianapolis home buyers to compare loans.

Expanded from 1page to 3, the legislators responsible for the new Good Faith Estimate want it to be simpler for homeowners and home buyers to understand than the former version. By most accounts, Congress will meet this goal.

The new Good Faith Estimate includes plain-English explanations of every fee, charge, and interest payment involved in a purchase or refinance. It also includes a section called 'The Shopping Cart' in which applicants can compare lenders. The new Good Faith Estimate is concise, too. Using a series of 'Yes/No' checkboxes on Page 1, mortgage lenders specifically note:

The interest rate on the mortgage
Whether the interest rate can change over time
Whether the loan carries a prepayment penalty
The length of the rate lock

Currently, this information is spread across 3 separate forms. Furthermore, the new Good Faith Estimate simplifies rate-and-fee comparisons, showing applicants how a lower rate can be available for a higher set of fees, and vice versa.

For all of its clarity, though, the new Good Faith Estimate still fails to address the issue of 'suitability'. As in, is this the right loan for the right borrower?

That's something only a loan officer can do. For suitable advice, talk with a loan officer who both listens to your needs and helps you plan for them. Great terms on an unsuitable loan are often worse than 'good' terms on the right one.

If you need a recommendation for a great loan officer, let me know.

Discussion

#1 Posted by Charlotte Real Estate at 12/7/2009 7:15 AM

Hi Paula,

It does change things... though my lenders are stressed, I think this is a net benefit to home buyers. One thing we'll have to deal with is the end of pre-approvals. One of lenders told me yesterday they won't be able to offer the pre-approval anymore because they can't do the Good Faith without a contract. So, there will be pre-quals, but no pre-approvals with offers.
Its good to re-connect. Hope you are doing well.

#2 Posted by Mark Jernstedt at 12/7/2009 1:05 PM

The new forms will also allow the borrowers to shop for some of the closing costs on page 2 and compare other mortgage quotes on page 3 of the good faith estimate. Borrowers should still pay close attention to the new forms,they are some what complicated and also lump fees together that in the past were itemized. One good site that already has the new forms is closingcostsfax.com they also let you shop for closing costs

#3 Posted by Marcia Carlson at 12/10/2009 1:31 PM

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#4 Posted by Apartment Rentals Hayward at 12/13/2009 10:44 PM

I think this is a great way to display information to those that may not easily understand loan agreements. Having easily worded information and a nice comparison sheet will be very helpful.

#5 Posted by Ashlee at 12/30/2009 8:38 PM

It looks like it will def. make it easier for the buyers to read. Just kinda stinks that lenders will not be able to do pre-quals any more though. Prequals are worth a million bucks now days!