A good faith estimate is a document that lists the estimated costs that must be paid at or before closing. Additionally, it identifies companies expected to provide services related to the loan, such as credit bureaus, appraisers, and closing agents. It is important to note that the fees listed are estimates, so the actual cost may differ.
At the top of the page, you will find the name of the lender or broker. If a lender is chosen at a later date, a second good faith estimate may be sent. Make sure all of the information is correct.
What Should I Look for in My Good Faith Estimate?
The costs charged by each lender and broker will not be the same, so it is a good idea to your good faith estimate to shop and bargain for the best prices.
The most helpful information can be found in these locations:
- Lines 800s – Items Payable in connection with the loan
- Lines 1100s – Title Charges
How Can I Negotiate These Charges?
The charges included in the good faith estimate may be negotiated. These are some of the questions you should ask:
- What is this fee for?
- Why is it being charged?
- Who will receive the fee?
- Can it be eliminated or reduced?
Use the information gained from these questions to bargain for the elimination of the charges with every lender. Line 1100 charges can be negotiated with the lender, broker, or closing agent. Don’t be afraid to ask for lower or erased charges, and don’t be afraid of lenders. They need your business more than you need to pay them extraneous charges or interest, especially if alternative lenders will offer a better deal.
What Is a Mortgage?
A mortgage is a loan that helps an individual pay for something, such as a home, using payments over a period of time. Two important documents in a mortgage transaction are a promissory note and a deed of trust.
A promissory note is a legal contract. In a promissory note, one party promises to repay a specific amount to the lender, usually a bank, within a set period of time, and they are responsible for paying back the loan even if the property is sold.
A deed of trust serves as a lien on the property. If the loan is not repaid as agreed, the lender may force the borrower to sell the property to repay the loan. In a deed of trust, the lender is guaranteed repayment.
A mortgage lender, or mortgagee, provides a loan to a borrower, or mortgagor, to purchase a home or property.
In most cases, a mortgage lender is a bank or mortgage company. Some individuals may be eligible to borrow from government-sponsored lenders such as the Federal Housing Administration (FHA), the United States Department of Housing and Development (HUD), or the United States Department of Veterans Affairs (VA). Once the mortgagor has satisfied the loan or paid off the home or property, the title to the home or property transfers to the mortgagor.
Other parties to a mortgage may include a mortgage broker or a real estate agent. Mortgage brokers assist borrowers in finding the best loan. Besides helping the borrower find a home or property to purchase, a real estate agent may also assist the borrower in financing their purchase through the mortgage lender and/or broker. Due to the number of parties involved and the importance of the purchase, disputes can arise.
Other Helpful Resources:
What is a Mortgage Lender?
In exchange for interest payments on a residential or commercial property, a mortgage lender lends money to borrowers. Mortgage lenders offer more than just mortgage loans to prospective homebuyers and real estate loans to homeowners.
Mortgage lenders, for example, sometimes sell mortgage-backed securities to finance mortgage loans. Besides mortgage-backed securities, these mortgage lenders may also offer debentures, common stock, and long-term notes.
Arrangement of mortgage loans is another service that a mortgage lender may provide. Mortgage brokers, for instance, are sometimes classified as mortgage lenders. Mortgage brokers act as intermediaries between lending institutions and borrowers to “broker” or orchestrate mortgage loan agreements but do not directly finance the loan.
To navigate the mortgage loan process, a borrower is generally advised to hire an attorney. Mortgage lenders also provide important advice to borrowers about mortgage loans and answer their specific loan questions.
What are Some Common Disputes and Violations Involved with Mortgages?
Legal issues can arise during or after a mortgage. The most common of these is a breach of the mortgage loan agreement. A mortgage loan agreement is a contract, meaning all breach of contract remedies are available if any party breaches. Examples of common issues that may arise from a mortgage are discussed below.
The most common legal issue between a mortgagor and a mortgagee is foreclosure. Usually, this occurs when the mortgagor falls behind on payments or fails to make them entirely. To satisfy the mortgagor’s debt, the mortgagee forecloses on the home or property and sells it at a public auction.
A mortgage fraud occurs when false or incorrect information is provided on a load application. Borrowers may lie about their income to obtain loans, for example. Borrowers in these situations will be charged with mortgage fraud. In cases of forged mortgage contracts, mortgage lenders may also be charged with mortgage fraud. If a lender commits mortgage fraud, the borrower may use that as a legal defense to a foreclosure.
Mortgage lenders engage in predatory lending when they target a vulnerable buyer, such as a first-time buyer or an elderly buyer. Due to their inexperience or inability to obtain loans elsewhere, lenders offer these individuals loans with absurdly high-interest rates or unreasonable terms.
Mortgage discrimination is also possible. Mortgage lenders cannot discriminate against a borrower because of their race, gender, religion, national origin, or another federally protected characteristic as defined in the Fair Housing Act and Equal Credit Opportunity Act. These federal acts protect a borrower from discrimination when seeking a mortgage or loan.
Is it Important to Have a Mortgage Lawyer?
Yes, since disputes can arise even before a mortgage is obtained, it is important to have a mortgage lawyer on hand. It is common for mortgages to consume an individual’s savings and to eat up most of their income.
A mortgage lawyer will be familiar with normal loan terms and will be on the lookout for predatory lending and discrimination. Lenders should answer any questions a borrower has about their loan or terms during the mortgage process.
What Do Mortgage Lawyers Do?
A mortgage lawyer or mortgage attorney is a lawyer who specializes in mortgages and any issues that arise from mortgages. A mortgage lawyer is knowledgeable in all areas of mortgages and can assist clients in obtaining a mortgage or assisting with mortgage lender disputes.
It is usually the biggest investment of a person’s life to purchase a home. It is possible, however, for errors to occur during the mortgage process. When making a purchase, a mortgage lawyer can explain a person’s rights and assist with any issues that may arise.
Do I Need an Attorney to Help Me with My Good Faith Estimate?
Yes, mortgages can be complex transactions with many parties involved. A mortgage lawyer can assist you in all aspects of a home or property purchase and can assist if any disputes arise out of the mortgage.
An experienced mortgage lawyer can review home purchase contracts, contract negotiations, and loan documents. Additionally, a mortgage lawyer can represent you in any proceedings arising from your mortgage dispute and file a claim on your behalf.
Feel free to consult a mortgage attorney if you have any questions about the good faith estimate. An attorney can be extremely helpful if you want someone to negotiate the best prices and rates for you or need help understanding the various stages of a real estate transaction.