How do You Determine Closing Cost?
The Good Faith Estimate

Introduction - The Good Faith Estimate

 

Welcome to the LendFast closing costs tutorial. At the end of this tutorial you should know everything you need to accurately understand and compare closing costs between lenders. We have chosen to begin the tutorial by explaining the good faith estimate, it will be referred to as a "GFE" here on out.

 

We will refer to the GFE quite often throughout the entire tutorial, we suggest that you print out a blank GFE to follow along. Below is a short explanation of each section that we will cover,; feel free to skip ahead each section is self explanatory. All of the links in the tutorial will open in new windows. Enjoy!

 

Typical Closing Cost   What are the typical closing costs? This is the by far the most asked question we are asked by or visitors concerning closing cost. I'm sorry to say the answer is just as confusing as the answer you will be given by most lenders, only more objective. The quick answer is around 2% of the total loan amount; the caveat is how large the loan amount is and where the profit of the lender has been placed.   Rates and closing costs have an inverse relationship to each other, if you take the lowest rate available the closing costs will be higher. If you will be in the loan for a short amount of time and decide to take a higher rate you should have low or no closing cost.
	Typical closing cost with a higher rate the lender should roll all sections of the GFE into a higher rate, more on this. Depending on how high the lender raises the rate is the degree that he can remove closing costs. Typically, with a higher rate the lenders will pay all of the sections on the GFE except the escrows and state and local taxes.   If you have elected to take the lowest closing costs the closing costs will be higher, specifically in the "800 block" of the GFE.

When the lender gives you a par rate  he will show all of the "junk fees" in this section to include an origination point for his profit. The lowest rate scenario is a good option for thos borrowers who intend to be in the mortgage for a long time. You should note; most borrowers take a mortgage with the expectation of keeping the mortgage for a longer time periodthan they actually do. Marriage, children, job changes and many other factors come into play when you are calculating how long you will be in the mortgage.

 

Good Faith Estimate - This section will introduce you to the general principals and legal aspects of the GFE.

 

GFE Explained - This section will disect the GFE line by line and give you an explanation for each charge that appears on it.

 

Unessecary Closing Costs - This section will give you a detailed reprt of which sections on the GFE are "fluff" and which are legitimate charges.

 

No Closing Costs Loans - This section will offer an unbiased explanation about "no closing cost loans."

 

FHA Closing Costs -  This section highlights the differences between FHA loans and other conventional loans.

 

Negotiating & Tips - Little tips and tricks that will help you get the best deal.