The Good Faith Estimate

If you've ever taken out a mortgage before, you probably know all about getting a good faith estimate. Taking out mortgage is a complicated process and there are literally dozens of different fees you'll have to pay for in order to get it. Processing, underwriting, property appraisal and document preparation are just a few of the fees you'll probably see. A good faith estimate is simply an estimate made by your lender to get the approximate fees due at closing. The fees range from lender to lender but you can expect to pay somewhere around 3%-5% of the sale price. As you can see, the price can be pretty significant and you'll want to shop around for different estimates. Before you go out to get your estimates, there are some things you should know about them.

What You Should Know About It

• First, keep in mind that the good faith estimate is exactly that. It's an estimate the lender makes to the best of their ability, but the final costs may vary so don't be surprised if you end up paying a slightly different amount.

• Some people have compared shopping for a mortgage to shopping for a new car. Many lenders include some unnecessary fees in there and you may be able to negotiate with them. If any fees seem much higher at certain lenders, ask your lender to explain them to you.

• Remember that some of the larger lenders that operate nationwide may not be able to provider a completely accurate estimate. They simply may not be familiar with all the taxes and customs in your area.

• Since mortgage payments are generally due on the first of the month, you may be able to reduce the prepaid interest you owe by closing near the end of the month.

• You'll have to deal with some fees from your local and state government, such as transfer taxes and recording fees. These should be the same at every lender and are non-negotiable.