Purchasing property and applying for a home loan involves a lot of details and paperwork. There’s a lot to keep track of and for many people it’s difficult to understand. Let’s face it, most people don’t understand every aspect of the loan agreement they have to sign in order to receive financing for a property purchase. But lenders do have to disclose the approximate costs you’re going to have to pay when the loan closes.
This disclosure is officially called a Loan Estimate, but many still refer to it by the disclosure form it replaced, the Good Faith Estimate (GFE). When you apply for a loan at Cliffco Mortgage Bankers, you will receive a Loan Estimate, and it’s important to know what you’re receiving.
Cliffco Mortgage Bankers Will Help You Understand Mortgage Loans
If you’re looking for a home loan, Cliffco Mortgage Bankers can help simplify the process. We can explain the steps involved in obtaining financing and we can help you learn how much house you can afford. We can get you pre-approved for a loan, and when we do, we are required to give you a Loan Estimate, so we want you to understand the ins and outs of the GFE or loan estimate.
The Basics of GFEs and Loan Estimates
As we mentioned above, the disclosure required when you apply for a loan used to be known as the Good Faith Estimate. That changed for most loans in October of 2015, according to the Consumer Financial Protection Bureau (CFPB). The GFE is still required to be given to applicants for reverse mortgage loans.
According to the CFPB your lender must receive your Loan Estimate within three business days after you receive an application. This requirement kicks in when you’ve provided:
- your name
- your income
- your Social Security number
- the property address
- an estimate of a value of the property
- the desired loan amount.
Among the information you’ll find on the loan estimate is your approximate interest rate, monthly payment and total closing costs. Among the more common closing fees you may pay are appraisal fees, payments to tax service providers, title insurance, government taxes and prepaid expenses such as property taxes, homeowners insurance and interest owed until your first payment is due. It will also let you know about possible penalties you may pay, for example if you pay off the loan too early.
The idea behind the Good Faith Estimate and the Loan Estimate is to give you a better understanding of the terms of the loan you’ve applied for. This will allow you to compare these terms with the terms of other loans so you can decide to move forward. The Loan Estimate will be given to you in clear language so you can understand all of the costs associated with the loan.
Cliffco Can Help You Obtain Financing for Your New Home
If you’re looking to purchase a home, Cliffco Mortgage Bankers can help make that happen. We’ll tell you about all of the options that might be available to you and the loan programs that can help you find the home you desire even if you might have trouble qualifying for traditional loans. To get started, contact us today.