“Good Faith Estimates” are how lenders detail the costs of a loan. Many borrowers rely on this estimate to select the lowest cost mortgage. But until recently, lenders were not required to actually charge those amounts. These estimates have caused me more headaches than any other form in the home buying process!
Which fees can increase between the estimate and settlement? The recording charge, title insurance fees, and other services required by a lender and selected from the lender’s approved list may increase up to 10%.
Charges that can increase without limit include daily interest charges, homeowner’s insurance, flood and pest insurance, and service providers (such as title insurance) not recommended by the lender.
Fees in the original estimate that cannot change include the Lender’s origination and underwriting charges, and “Points” based on the interest rate chosen.
In our area, where loan costs run from $1,000 to $2,000, a bad estimate is not the end of the world. But in areas where costs exceed 2% of the loan, a bad estimate can create serious problems. Sage encourages you to do your own shopping, and can provide quotes and recommend providers who offer good deals and will not “surprise” you at settlement. Learn more on the subject in the HUD "Shopping for your Home Loan” booklet.
