If you have been shopping for a mortgage, chances are you have found the process to be overwhelming and confusing. Besides the multitude of loan programs available, it can still be confusing even if you are only looking for a 30 year fixed due to the way each mortgage company quotes their rates and fees. Unfortunately, there is no “standard” way of quoting rates and fees among lenders. Some mortgage companies include items such as the appraisal and credit report fees in their closing costs and some don’t. Are they being deceitful in doing so? While some are new to the business and don’t understand how the business works, most are playing games by sounding cheaper than the rest.
So what’s the best way to shop for a mortgage? Always request a Good Faith Estimate. If you’re not familiar with this form, this is a standard form that mortgage companies use to disclose particulars about the loan such as the loan amount, rate, and most importantly a breakdown of the various fees and other charges such as escrows for taxes and insurance. The GFE,as it is sometimes called, loosely mirrors HUD’s Settlement Statement, the final statement you receive at closing. It is set up this way so that you can easily compare the fees from the original estimate to easily show discrepancies.
As you talk to each lender, be sure to ask for a complete list as well as a breakdown of their fees. Then ask them to e-mail you a GFE. If they can’t or won’t email an estimate, I would take them off your list. Not only do you have the right to see an estimate from each lender, you’re doing yourself an injustice if you don’t ask for one from each.
Gregg Harris has written 16 articles on LenderCity
