When deciding to buy a home, several smaller decisions are involved at the same time. One of these decisions is “should I use a mortgage broker to help me determine the right loan for my purchase”? For many reasons, the answer to this question is usually yes.
Finding a mortgage broker will help you consider all the loan options available to you (not just the mortgage loan the lending institution wants you to take so they maximize their profit off your situation). A mortgage broker will look at you complete financial picture from the money you can put down to monthly mortgage payment range to purchase price and help you craft the best financial picture for your situation. A mortgage broker will guide you through the entire decision making process and ask questions you may not ask yourself to solidify a financial future that’s in your best interest, not the lenders.
What is a Good Faith Estimate?
As you begin the mortgage loan process the government, through the Federal Real Estate Settlement Procedures Act, requires lenders to give you a document that lays out all the costs associated with the mortgage. This document is called a “Good Faith Estimate” (GFE) and must be produced within three days of your loan application.
The GFE helps borrowers compare the real costs of their loans against competing offers to determine the lender offering the best deal for their mortgage loan. Good Faith Estimate closing costs outline everything from the interest rate to insurance fees associated with your particular mortgage loan.
The reason many people enlist the help of a mortgage broker in this process is a GFE can be tricky to understand. Some lenders won’t list costs the same way or lump services in fees different than other lenders and this can lead to confusion for even the most seasoned real estate investor.
How to Analyze Good Faith Estimate Closing Costs
If you, or a mortgage broker, is looking at your GFE from a lender, there are variables you should inspect to get a complete picture of the costs of your loan.
- What’s the interest rate of the loan and are there any discount points?
- What are the fees for the discount points and when will you start seeing a return on the lower rate to offset those fees?
- What are the lender’s fees costs for things like the appraisal fee, the credit report fee, and interest lock-in fee?
- Does the escrow fee include a title search or title insurance fees?
- Are the fees locked in or might the lender be understating the fees only to rise them the day of closing?
- Most importantly what is your Adjusted Origination Fee vs. the interest rate quoted. The Adjusted Origination Fee shows the sum of all lender fees paid including origination and discount points.
Finding a Mortgage Broker Who Can Help You Read Your GFE
As you can see, the GFE is just the beginning or navigating the choppy waters in the mortgage loan industry and without the assistance a mortgage broker provides, many people feel like they’re drowning in fees and expenses they don’t have the framework to understand.
If you’re beginning the process or buying a hom and feel like finding a mortgage broker you can trust would make the situation more manageable, contact the mortgage loan experts at Sammamish Mortgage today to learn more about Good Faith Estimates and the “real costs” of your mortgage loan offers to make sure you get the best deal on a mortgage loan you can.