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Good Faith Estimate Cost Items

Good Faith Estimate Cost Items

  • 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
  • Rate Details*
    Loan Program:  
    Monthly Payment:  
    APR:  
    Rate:  
    Points  More Info:
    Points: Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
     
    Total Lender Fees:  
    Loan type:  
    Property Value:  
    Loan to Value:  
    Credit Rating:  
    Date Submitted:  
    Monthly Housing Payments
    P & I More Info
    Principal & Interest: A periodic payment, usually paid monthly, that includes the interest charges for the period plus an amount applied to the reduction of the principal balance.
    Mortgage Insurance More Info
    Mortgage Insurance: The monthly cost for a policy that protects the lender in case you’re unable to repay the full amount of the loan. It is typically required for loans that have a loan-to-value ratio between 80% to 100%.
    (Estimated)
    Property Tax More Info
    Property Tax: (Also called "Real Estate Tax.") Property taxes are government assessments on real estate property. With mortgage financing, the local, county or state tax assessment on real estate property is considered part of the monthly housing obligation and typically collected and set aside by the lender ...
    (Estimated)
    Homeowner Insurance More Info
    Homeowner Insurance: or also commonly called hazard insurance, is the type of property insurance that covers private homes. It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one’s home, its contents, loss of its use, or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.lender ...
    (Estimated)
    Homeowner Association Fee More Info
    Homeowner Association fee: (HOA) fees are funds that are collected from homeowners in a condominium complex to obtain the income needed to pay (typically) for master insurance, exterior and interior (as appropriate) maintenance, landscaping, water, sewer, and garbage costs.
    (If Any)
    Total Monthly Housing Payments
    Lender Fees
    Points More Info
    Points Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
    Origination Fee More Info
    Origination Charge: A loan origination charge is a fee charged by the lender for evaluating, processing, and closing the loan.
    Credit Report Fee More Info
    Credit Report Fee: Fee charged to obtain an applicant’s credit history prepared by one or all of the three major credit bureaus. Used by lender to determine the borrower’s creditworthiness.
    Tax Service Fee More Info
    Tax Service Fee: A fee charged by the lender to cover the cost of retaining a tax service agency. These agencies monitor the property tax payments on the property and report the results to the lender.
    Processing Fee More Info
    Processing Fee: A processing fee is a charge by the lender for clerical items associated with the loan. Examples of processing include loan set up, organization of loan conditions for underwriting, and preparing required disclosures for the borrower.
    Underwriting Fee More Info
    Underwriting Fee: A fee charged by the lender to verify information on the loan application, authenticate the property’s value, and perform a risk analysis on the overall loan package.
    Wire Transfer Fee More Info
    Wire Transfer Fee: In most cases lenders wire funds to escrow companies to fund a loan. Commercial banks that perform this function will charge the lender so the fee is generally passed on to the borrower.
    (If Any)
    FHA Upfront Premium More Info
    FHA Upfront Premium: A fee paid in cash at the close of escrow or more commonly it is financed into the loan. These premiums are pooled together by the FHA and are used to insure the risk of borrower default on FHA loans. FHA upfront premiums are prorated over a five year period, meaning should the homeowner refinance or sell during the first five years of the loan, they are entitled to a partial refund of the FHA upfront premium paid at loan inception.
    (If any)
    VA funding Fee (If any)
    Flood Fee
    Other Fees More Info

    Other fees could be either additional Administrative Fees that a lender charges or it could be a Flat Fee to cover all lender charges such as: (Origination Fees, Points, Underwriting and Processing Fees, Credit Reports and Tax Service Fees)

    The flat fee does not include prepaid items and third party costs such as appraisal fees, recording fees, prepaid interest, property & transfer taxes, homeowners insurance, borrower’s attorney’s fees, private mortgage insurance premiums (if applicable), survey costs, title insurance and related services.

    Total Lender Fees
    *Actual rates and other information may vary. Sponsored results shown only include participating lenders. The information you enter on this page will only be shared with lenders you choose to contact, either by calling the phone number or requesting a quote.
    Current Mortgage Rates as of December 11, 2018
    • Lender
    • APR
    • Loan Type
    • Rate
    • Payment
    • Fees
    • Contact
    Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. The actual payment obligation will be greater if taxes and insurance are included. Click here 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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