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Good Faith Estimate Cost Items

Good Faith Estimate Cost Items

Michael Jensen, Mortgage and Finance Guru
, Mortgage and Finance Guru
  • Great Mortgage IdeaPlease note that the Good Faith Estimate was replaced by the Loan Estimate effective October 3rd, 2015 and is no longer used in the mortgage process. We provide the Good Faith Estimate Cost Item Breakdown below for your reference.  We recommend that you review the Loan Estimate instead.
  • As required by RESPA, the Good Faith Estimate contains detailed information on the key terms of a mortgage, including interest rate and closing costs.  Page one of the Good Faith Estimate provides key mortgage information such as interest rate, total Adjusted Origination Charges (lender fees), Charges for All Other Settlement Services (fees for non-lender third parties) and Total Estimated Settlement Charges (settlement charges is another name for closing costs).  Total Adjusted Origination Charges and Charges for All Other Settlement Services can be found in items A and B at the bottom of page one.  A breakdown of these cost items is found on page two of the Good Faith Estimate and these items are explained in detail in the table below.

  • FREEandCLEAR Mortgage Instructional Video

    Good Faith Estimate Overview Video

  • The table below explains many of the cost items that are included on a Good Faith Estimate.  Please note the last two columns of the table below indicate if cost a item is an up-front or ongoing cost.  Up-front costs occur one time and are called non-recurring closing costs. Examples include lender, appraisal, title company, escrow and attorney (if applicable) fees.  Ongoing costs are costs that will continue to occur over the life of the mortgage and are called recurring closing costs.   Examples include interest (from the day your mortgage closes until the end of the month in which your mortgage closes), homeowner's insurance, pro-rated property taxes and homeowners association fees (if applicable).

    The charges shown in the table below are for a conventional mortgage, or a non-government backed mortgage.  If you obtain a mortgage through the  VA Home Loan Program or FHA Mortgage Program you are required to pay an additional one-time, up-front fee. The up-front funding fee for a VA mortgage ranges from 1.25% to 2.40% of the mortgage amount for the first time use of the VA home loan program, depending on your military status and down payment. The up-front mortgage insurance premium (MIP) for an FHA mortgage is 1.75% of the mortgage amount.

  • Great Mortgage IdeaReview the table below to understanding the cost items outlined in the Good Faith Estimate. Understanding these items will help you negotiate a better mortgage and save money
  • Key GFE items
    Item Definition Determining Party Approximate Cost Up-Front Cost (Non-Recurring) Ongoing Cost (Recurring)
    Interest rate
    • The interest rate you will pay on your mortgage. The GFE indicates if your interest rate could rise over the course of your mortgage
    • Lender and borrower
    • Determined by market and negotiations with lender
    • ~3.75%
    • x
    Adjusted Origination Charges: fees charged by lender or mortgage broker
    Origination charges (Origination points)
    • The total of all broker and lender fees including any origination points (1% of the mortgage amount), administration, commitment or processing fees and other smaller charges
    • Lender
    • ~1.5% - 2.0% of mortgage amount
    • x
    Lender discount points or credits
    • The borrower decides whether to pay a discount point or points to obtain a lower interest rate than he or she would otherwise receive
    • A discount point is an up-front fee that represents 1% of the mortgage amount
    • If you pay discount points, your interest rate should be lower than if you do not pay points
    • You may also receive a rebate of lender fees, which is called a credit. This occurs when the interest rate charged by the lender is higher than the market rate
    • Lender and borrower
    • 1 point = 1.0% of mortgage amount
    • x
    Settlement Services Charges: fees charged by non-lender third parties
    Appraisal fee
    • Fee to obtain appraisal report
    • Appraiser
    • ~$400
    • x
    Tax service fee
    • Fee to set-up an account with tax service company to make sure you pay your property taxes
    • Lender
    • ~$60
    • x
    Flood certification fee
    • Fee to make sure that the property is not located in a flood plain
    • Lender
    • $15
    • x
    Homeowners association (HOA) certification fee
    • Fee charged by the HOA to provide information on the property
    • Only applicable if property is subject to HOA fee
    • Homeowners Association
    • ~$50 - $300
    • x
    Credit Report Fee
    • Fee charged to obtain a copy of your credit report
    • Lender
    • $25
    • x
    Title services and lender's title insurance (Including escrow /closing agent fees)
    • Sum of all fees charged by the title company and closing or escrow agent. Generally determined by real estate agent if you are buying a home or lender if you are refinancing
    • Real estate agent or lender
    • ~.35% of mortgage
    • x
    Owner's title insurance
    • Fee charged to purchase title insurance for buyer
    • Title insurance that insures the buyer in the rare event that there are defects or errors in the property's title and a party makes a claim against the property at some point in the future
    • Seller
    • TYPICALLY PAID FOR BY SELLER
    • ~$1,500
    • x
    Termite / home inspection reports
    • Fee charged for termite report and home inspection report that identifies potential issues with property
    • These reports are at the request of the buyer / borrower
    • Borrower
    • $35 (termite report)
    • $200 - $750 (home inspection report)
    • x
    Government recording charge
    • State and local fees to record your mortgage and title documents
    • May include grant deed recording charge
    • Local city / county government
    • ~$150
    • x
    Transfer tax
    • Tax or fee charged by some local city government to transfer property ownership from seller to buyer
    • Cost amount varies but can represent 1% or more of the property purchase price
    • Almost always paid for by the seller
    • Local city government
    • TYPICALLY PAID FOR BY SELLER
    • Cost varies by city
    • Can be 1% or more of the property purchase price
    • x
    Initial escrow deposit
    • The lender may require the borrower to pay for property tax, homeowner's insurance and other fees such as private mortgage insurance (PMI) or mortgage insurance premiums up-front
    • The payment for these fees are deposited in an impound account and then distributed to the appropriate parties when payment is due
    • If you are not required to pay into an impound account, then this item should be $0
    • Local government (tax)
    • Homeowner's insurance company
    • Lender / government agency (FHA)
    • Property tax (~1% of property purchase price)
    • Insurance (~0.1% - 0.2% of the purchase price )
    • PMI (.20% - 1.65% of mortgage amount)
    • x
    • x
    Daily interest charges
    • Daily interest charge on your mortgage from the day of settlement (mortgage closing) until the end of the month
    • Lender
    • Depends on interest rate and number of days from date of mortgage closing to first day of the next month
    • x
    • x
    Homeowner's insurance
    • Charge to buy homeowners insurance, which is mandatory when you purchase a property
    • Also referred to as Hazard Insurance
    • Borrower
    • ~0.1% - 0.2% of the property purchase price
    • x
  • %
    Current Mortgage Rates as of February 16, 2019
    • Lender
    • APR
    • Loan Type
    • Rate
    • Payment
    • Fees
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    %

    Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. Click for more information on rates and product details.
  • Sources

    Good Faith Estimate: https://www.consumerfinance.gov/ask-cfpb/what-is-a-good-faith-estimate-what-is-a-gfe-en-146/

About the author

Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael

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