The New Good Faith Estimate

Posted at 10:22 AM, Nov. 18, 2008

How exciting, as of January 2010, the Federal Government will issue a new, easier to read and understand version of the Good Faith Estimate provided to mortgage applicants.  This new version promises to put into clear and concise terms the break down of the program(s) the applicant is interested in and what the bottom line will be.  Great news!!

Read courtesy of Steven Levitt (Guaranteed Rate):

Latest From : The Levitt Report

How The New Good Faith Estimate Form Can Help You Save Money On Your Mortgage Posted: 14 Nov 2008 09:45 AM CST To help demystify the mortgage process, the federal government is giving the much-maligned Good Faith Estimate document a makeover. Effective January 1, 2010, the current, 2-page form will be replaced by a new, easier-to-understand version, spanning 3 pages. The biggest strength of the new Good Faith Estimate is that it uses everyday English to explain how the mortgage works. For example, in one section titled "Loan Summary", the Good Faith Estimate specifically answers: What is your interest rate? Can your interest rate rise? Does your loan have a prepayment penalty? Using today's disclosures, the answers are spread across 3 separate forms. In addition, the new-look Good Faith Estimate identifies what charges are legally allowed change at the time of settlement, and how a mortgage applicant can opt for higher fees in exchange for a lower mortgage rate, and vice versa. These educational elements are lacking from the current model. But for all of its clarity, the Good Faith Estimate doesn't address the issue of suitability. As in, is this the right loan for the right borrower? The new Good Faith Estimate won't prevent homeowners from choosing "bad loans" -- it will only educate them about the loan's facts. For suitable advice -- as always -- talk with a trusted mortgage professional who will both listen to your needs and help you make plans for them. Getting the "best terms" on an unsuitable loan can be far worse that getting great terms on a loan that fits.