When a loan (LO) officer sells a loan without having to disclose the good faith estimate up front he treats this as an invitation to get creative with the fees.
Note: Lenders are not required to deliver the same figures at closing then they originally quoted to you early on in the deal. Remember, the third word in the document's name is "estimate" and you can bet the salesman focuses on this word a lot more than he does the words "good faith".
The key to getting a GFE before the application is processed is that it gives you a measuring stick when reviewing the final numbers. The numbers are bound to change when all the fees are finally tallied, however having the before and after quotes gives you the ammunition you need to make the lender explain the differences in the fees.
A Good Faith Estimate is divided into 6 sections, which we will cover in detail. Each one of these sections represents a different set of fees from different entities but all in relation to each other. When analyzing a GFE you should begin with the heading. The heading will show the proposed interest rate, loan program and loan amount. These three things should not change before closing, if they do you should have been warned in advance and given a good reason.
Below the heading are the individual blocks of fees. Each grouping is numbered from 800 - 1300, i.e. 800 block, 900 block 1000 block and so on. Within each block, you will see the line item charges, 801, 802, 803, and so on. A good faith estimate is standardized document that should not differ from lender to lender. This makes it easier when comparing closing costs from lender to lender.
However, some lenders will try to quote you on an unofficial estimate of their own design. If the document does not begin with the words "Good Faith Estimate" it is not real. You should insist on real document so that you are comparing apples to apples. My experience is that when lenders are using forms other than the GFE to quote borrowers they usually have something to hide.
It is important to note that within the 6 sections lenders only control one section, the 800 block. All of the other blocks are fees from the state, real estate agents, escrows, and title companies. So, when negotiating closing costs with the lender you should only be referring to the "800" block of fees. All of the other third party fees can be negotiated by you with any company of your choice.
Most mortgage companies will breeze over the point that you are allowed by law the ability to choose your own title company and closing agent. You can usually save a couple hundred bucks by shopping for your own closing agents and title insurance. The "built in" relationships that mortgage companies have with their closing agents rarely yields you the best prices.
Important: Some lenders will balk at furnishing a GFE early on in the application process especially if they don't have all of the documents they need to give you accurate figures. This is actually responsible lending, however, If you have given them all of the information that they need to give a credible quote they should give you a full GFE at the time that they quote you. If a lender tries to "close" you and begin the mortgage without providing a GFE I suggest that you change lenders.
