How to Interpret a Good Faith Estimate

A Good Faith Estimate, or GFE, gives you as a borrower an outline of the costs to be charged upon closing your loan.

GFE's also act as protection for borrowers to keep lenders honest on what they charge.

Keep in mind, the GFE does not show your annual percentage rate and it can change daily unless you lock in your interest rate.

The costs listed in a GFE include many miscellaneous fees home buyers may not recognize. Educate yourself on the GFE before purchasing a home!

An Example GFE

Let's take a look at each of these costs briefly to make sure you understand why they are charged. Below is an example of an actual Good Faith Estimate (GFE). Notice the labels outlining the costs.

Good Faith Estimate

View a Full Example GFE in .pdf - Click Here

Common GFE Terms and Fees

Here are the costs highlighted on our example GFE.
Loan origination fee - This fee is charged to the borrower for making the loan.

Appraisal fee - The appraisal fee covers the property appraisal, which determines the value of the home.

Processing Fee - This is a lender fee for reviewing loan paperwork.

Underwriting Fee - This fee covers the cost of underwriting your loan.

Title Fees - Fees that cover the services of the title company, which handles the closing of your loan.

Recording Fee - This fee goes towards creating a public record of legal ownership for you on your home.

Prepaid Interest - Interest due on your loan from date of funding to the end of the month.

Escrow Fees - Escrow fees are held by the lender in order to pay your future insurance and tax fees.

VA Funding Fee - Unique to VA Loans, this one time fee is rolled into the total loan amount.

Kaleb Long

Kaleb Long is one of our hard working dedicated VA Loan Specialists.