Dear Carolyn,
I am not sure if I should ask for my Good Faith Estimate in the pre-approval process before finding the house to purchase or after the property is identified. I am about to make an offer. Can you clarify? ~ Chris
Yes Chris, here is the process you’ll want to follow for a smooth and secure mortgage experience:
1) Ask for a cost estimate or initial fees worksheet. This is the new upfront estimate that you can get without having your credit pulled or providing all your financial documentation.
2) Based on these estimate worksheets, choose your lender/loan officer.
3) Submit your financial documentation and have your credit checked by your chosen loan officer, so that you can obtain a solid pre-approval letter, in writing.
4) Go house shopping, with your pre-approval letter in hand, with your real estate agent. Your agent will need the letter when you submit an offer to buy a house.
5) After you’ve found a house and have a mutually signed purchase agreement, then you send that signed agreement to your loan officer, who will then adjust your loan amount, etc., accordingly and provide you with full loan disclosures. These loan disclosures include the 3-page Good Faith Estimate, Truth-in-Lending form, and other pertinent information about your loan.
If you need more personal help, please click on my webpage above that says, Review My Estimate.
Best wishes and happy house hunting!
Carolyn Warren
Carolyn,
After reading your book and reading this post I’m a little confused. What type of legal integrity is the loan officer held to between the initial cost worksheet and the GFE. What stops them from jacking their fees up when they submit their GFE, all this after you have selected and agreed to an offer on a home. Are you able to shop your loan at this point or are you too committed to this loan office at this stage? I nthe book it seems like the GFE legally binded these loan offices to what they estimated and now with just a cost worksheet they can BS until you really need them.
Thanks!
Integrity has always been an issue in the mortgage industry, at all levels. With the new law, you have one guarantee in place you did not have before, and that is that the lender cannot raise their lending fees by even $1 between the time you accept the GFE and closing. The exception would be if there was a change in circumstances, such as if your credit score lowered.
There is no law that protects you from a loan officer raising the lender fees from the initial cost worksheet and the GFE. On occasion that has happened, and then the borrower cried “fowl” and moved on to another lender. You are not legally obligated to close with a particular lender, even after you have signed the disclosures. The disclosures are for your information; they are not a contract or commitment on your part.
Remember, you can always take my suggestion to ask for a written guarantee (email is fine) that the loan officer will not raise his/her fees from the initial cost estimate. I recommended that in my book for the GFE, but now it applies to the cost estimate instead (due to new lending laws).