Understanding the Good Faith Estimate (GFE)

Lines 801, 802, and 808 - Loan Origination, Discount, and Brokerage Fees These one-time fees are also be known as "points." They cover the lender's & broker�s administrative costs in processing the loan. They are often expressed as a percentage of the loan and will vary depending on a variety of factors. Line 803 - Appraisal Fee Usually between $250-$450 (larger homes may be more). Paid in advance of settlement. Line 804 - Credit Report Usually between $12.50-$65. Cost of pulling credit report. Line 809 - Tax Related Service Fee Charged by Lender to either set up your tax escrow or to insure that property taxes have been paid. (Approximately $79 - $89) Line 810 - Processing Fee Administrative cost to process your loan. (Approximately $500-$650) Line 811 - Underwriting Fee Charged by Lender for administrative cost. (Varies greatly $200 - $1000) Line 812 - Wire Transfer Fee Charged by Lender for cost associated with electronically sending funds to Title co. (Approximately $35) Line 813 - Flood Certification Charged by Lender for cost associated with making sure that you are not in a flood zone. (Approximately $16 - $24) Line 901 - Interest for "X" days Lenders usually require borrowers to pay the interest that accrues from the date of settlement to the first monthly payment. (Subtract the proposed settlement date from the end of the month and multiply by your proposed interest rate.) Line 902 - Mortgage Insurance Premium The lender may require you to pay your first year�s mortgage insurance premium or a lump sum premium that covers the life of the loan, in advance, at settlement. (The factor to figure out what you might have to pay upfront (FHA only) is to take your new loan amount X 1.5%. The monthly MI is your new loan amount X .78%.) Line 903 - Hazard Insurance Premium Hazard insurance protects you and the lender against loss due to fire, windstorm, and natural hazards. Lenders often require that the borrower pay the first year�s premium at settlement. (Get this estimate from your Insurance co.) Line 904 - Flood Insurance If the lender requires flood insurance, it is usually listed here. (Get this estimate from your Hazard Insurance co.) Line 905 - VA Funding Fee This fee is required on VA loans. (Ranges from .5% to 3% of the new loan amount.) Line 1001 to 1004 - Reserves deposited with Lender If your loan includes impounds for taxes and insurance you will be required to pay a certain number of months in advance. If your required to "escrow", you'll need to give x amount of months to Lender at time of settlement. Your Title CO. will give you this number along with all these other cost BEFORE you go to settlement via a HUD 1. (Ranges from 1 month up to 6 of your Hazard Insurance, Property taxes and (if required) Mortgage insurance.) Line 1101 - Settlement or Closing Fee Title charges may cover a variety of services performed by title companies and others. Your particular settlement may not include all of the items below or may include others not listed. This fee is paid to the settlement agent or escrow holder (Title co.) Responsibility for payment of this fee should be negotiated between the seller and the buyer. (Approximately $200 - $400) Lines 1102-1104 - Abstract of Title Search, Title Examination, Title Insurance Binder The charges on these lines cover the costs of the title search and examination. (Approximately $75 - $150) Line 1105 - Document Preparation This is a separate fee that title companies charge to cover their costs of preparation of final legal papers, such as a mortgage, deed of trust, note or deed. (Approximately $50 - $200) Line 1107 - Attorney�s Fees You may be required to pay for legal services provided to the lender such as an examination of the title binder. Occasionally, the seller will agree in the sales contract to pay part of this fee. The cost of your attorney and/or the seller�s attorney may also appear here. If the lender requires an attorney�s involvement, the fee will appear on this part of the form, or on lines 1111, 1112, or 1113. (Approximately $50 - $150) Line 1108 - Title Insurance The total of "Owners Insurance" (protects you and is optional) and "Lender�s Title Insurance" (protects the Lender) is shown here. - (Get form your Title co.) Line 1201 to 1204: Government Recording, City, county and/or state tax stamps, and Transfer Charges: These fees may be paid by you or by the seller, or split, depending upon your sales contract with the seller. The buyer usually pays the fees for legally recording the new deed and mortgage (line 1201). Transfer taxes, which in some localities are collected whenever property changes hand or a mortgage loan is made, can be quite large and are set by state and/or local governments. City, county and/or state tax stamps may have to be purchased as well (lines 1202 and 1203.) Usually these are shared equally between buyer and seller. (Get these from your Title co.) Line 1301 - Survey The lender may require that a surveyor conduct a property survey. This is a protection to the buyer as well. Usually the buyer pays the surveyor�s fee, but sometimes the seller may pay this. (Approximately $150 - $350) Line 1302 - Pest and Other Inspections If required by Lender, this fee is to cover inspections for termites or other pest infestation of your home. (Approximately $35 - $45)