Tag Archives: LE

Good Faith Estimate, Loan Estimate, or Cost Estimate?

House prettyPeople are confused about how to get an estimate for their mortgage. If you are getting pre-approved to buy a home or want to refinance, here is what you need to know about getting an upfront estimate.

GOOD FAITH ESTIMATE

This form was officially retired October 3, 2015. The Consumer Finance Protection Bureau (CFPB), the committee set up by the White House to oversee lending law, replaced it with the Loan Estimate. However, you cannot get an LE upfront, so please read below. To be perfectly clear, the GFE is dead and gone. No more GFEs allowed.

LOAN ESTIMATE

This simplified form is what you get only after making a full application. That means you provide the lender with these six items: (1) name, (2)  social security number for pulling credit report, (3) property address, (4) sales price or estimated value of property, (5) loan amount, and (6) income.

As you can see, #2 will stop you if you aren’t ready to commit to a lender and have your credit report pulled. In addition, #3 will stop you if you’re still shopping for a home and don’t have an address. This is why you don’t ask for a loan estimate upfront. It comes later in the process.

COST ESTIMATE WORKSHEET OR FEES WORKSHEET

This is the new “upfront Good Faith Estimate.” This form will show you everything you need to see about your loan: interest rate, monthly payment, lender fees, and other closing costs. If you read Mortgage Rip-Offs and Money Savers or Homebuyers Beware, use the same shopping method in those books, except ask for a Cost Estimate rather than a GFE. It doesn’t matter what title is at the top of the page, so don’t worry if a lender has a variation.

If you have any questions about this, post a comment or send me an email.

I am licensed to do mortgage loans in California and Washington states. Please let me know if I can be of help to you.

NMLS #1284134
Envoy Mortgage, a full service mortgage lender

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How to Shop for a Mortgage Now — with no GFE, Good Faith Estimate, post-TRID

Speak with the loan officer to determine if you have a good personality match.

Since the release of new lending laws, commonly called TRID, on October 3, 2015, there is no more GFE (Good Faith Estimate) or TIL (Truth in Lending). Both of those forms have been replaced by the Loan Estimate (LE). But, you cannot get a LE without first having the address of the property you want to buy. So how do you shop for a home loan at the pre-approval stage?

Here is a quick and easy summary of the three steps I recommend.

1) Call three lenders and ask for an Estimate Worksheet.
This is the new upfront GFE. Depending on the lender, they might call it an Initial Fees Worksheet, Fees Worksheet, or simply use an Excel spreadsheet. Either way, this form shows the interest rate, monthly payment, and fees so you can see the cost of the loan.

2) Speak with the loan officer, compare pricing, and choose your lender.
Notice that I did not say email the loan officer and make your choice. Don’t be lazy! This decision is too important for you to hide behind your screen. Pick up the phone and have a real conversation with the loan officer, because you need to get a sense of whether or not this person is honest, communicates well with you, will provide good service and updates throughout the loan process, and so on. You cannot get all that in an email.

3) Proceed with your pre-approval.
Now is the time to submit your income and asset documentation, photo ID, as well as other paperwork so you can get a good, solid pre-approval letter on company letterhead. You will need this in order to present an offer on a property. Give your pre-approval letter to your real estate agent.

That’s it! Now you are ready to meet with your Realtor and shop for homes.

After you have a mutually signed Purchase & Sale Agreement, ask your agent to send a copy to your loan officer. Now the time clock begins!

With a closing date in place and the PSA in  hand, your loan officer will proceed with processing your loan. He or she will send you Loan Disclosures that include the Loan Estimate as well as other information required by TRID law. You will sign to acknowledge receipt and work with your loan officer through to closing.

If you happen to be buying a home in California or Washington, I would love to be your loan officer and mortgage advocate.  I work for Envoy Mortgage, a full service mortgage lender. (We have our own money to lend as well as work with the wholesale division of other lenders such as Chase, Wells Fargo, Caliber, and others to get you the best deal.) My NMLS # 1284134. Envoy is a Fair Housing and Equal Opportunity Lender.

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