Free GFE Review
It is very comforting to know that there are actually loan consultants, like Solomon Financial, that will take the time to review my information. The whole application process to closing was eye opening insofar as taking the time to explain to me details I may not have otherwise have known. It is surprising to know that some of them do not hesitate to prey on folks like me who simply don't understand this type of thing. I recommend your firm to all my friends and family.
B. Robertson, Southern California
Does it make sense to get a lower rate & pay closing costs - Loan Cost Analysis sample
How do I know if I Have a Good FAKE Estimate or a Good Faith Estimate?
In a recent survey, 75% of all borrowers do not receive their Good Faith Estimate (or GFE) within 3 days after making a home loan application as required by Federal Lending laws. Without a GFE the borrower has no real way of knowing what their interest rate will be and no way of knowing what the costs of getting the mortgage are, or if in fact there are "junk fees" rolled into their loan.
Another fact is that of those that DID receive the estimate within the required period, over half were either BLANK, had many "junk fees" not identifiable by the consumer and were deemed useless in helping the consumer make an informed decision.
Take the case of Robert M. from California. The day before closing on his first home he, "got a call that my numbers were wrong," he says. The title company informed him that her HUD-1 Settlement statement calculated that she would have to go to closing with $7,000 more than he had expected to need.
They were bitten by an inaccurate good faith estimate. It happens to thousands of people every year, and the victims have no recourse. Either they pay up or the deal falls apart.
For them excitement over buying his first property with his pregnant wife deemed very stressful. They had scraped together every last bit of savings for the down payment on the newly built house. They didn't have a spare $7,000.
Federal regulations require brokers and lenders to provide a good faith estimate of closing costs, but there is no penalty for inaccuracy. Lenders and brokers can provide a low estimate, then spring an expensive surprise in the final hours without getting into trouble with the feds. *See our article on predatory lending on our website.
Because the government won't protect you from an inaccurate good faith estimate, you have to watch out for yourself. You have to review the estimate critically and ask questions until you get clear and precise answers.
Finally, ask if there is a pre-payment penalty (hard or soft pre-payment if applicable). Ask our loan consultants for the difference between the two. We have seen GFE's assessed unnecessarily as was the case with our co-host, Kerri Kasem, by her loan officer (not Solomon Financial) and she in fact had good credit scores. She should NOT have been assessed this hard pre-payment penalty. (For options on refinancing from an old loan that HAS pre-payment penalty, speak to a Solomon Financial advisor at (800) 811-7709.