Thursday, November 20, 2008

Good Faith Estimates

Final RESPA Reform Rule -

The United States Department of Housing and Urban Development (HUD) has published its final RESPA reform rule. Included is a new standard Good Faith Estimate (GFE) that lenders and mortgage brokers will be required to provide to consumers. The purpose of the standard GFE is to provide homeowners with clear loan terms and costs from different lenders that can be easily understood and compared. HUD also has created a new page on the HUD-1 Settlement Statement to help homebuyers better understand what they are being charged at closing and how these charges compare to the GFE issued by their lender. Unfortunately, this will not go into effect until the beginning of 2010.

My 2 cents - I understand loan charges and I have often been mystified by some of the good faith estimates I have seen in the past. I like the idea of a uniform estimate so consumers can easily compare different lenders. Also, ask your realtor to work up an estimated net sheet of your own for all your closing costs. This will reinforce the information you are getting from your lender as well as put perspective on all the costs involved.

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