How to Read a Good Faith Estimate of Closing Costs: Pulling Out the Truth!

There are two factors that drive most mortgage decisions for borrowers: interest rate and closing costs. We advise in our report "Why the Lowest Interest Rate is Not Always the Best Deal" how to look at the complete loan picture when making a decision on a loan product because it is absolutely true that the best rate is not always the best deal.

On the other side, the lowest closing cost quote also does not necessarily identify the best deal. Why? Because not all mortgage brokers and loan officers include all the costs related to closing a loan, and since a large portion of those costs are just estimates in the beginning, they often low-ball them, giving a false sense of total cost to close a loan. In the end, you get surprised with additional costs at a time when it's too late to walk away from the deal.

We fight this battle every day. We believe in setting our borrower's up for success, so we list every single cost they'll encounter on their way to closing the purchase transaction, and we try to provide some cushion to make sure we plan for enough funds. The only surprise we want, is needing less money to close, not more. But, our competitors will many times provide much lower closing cost numbers, and when we have an opportunity to review their numbers, it's because they didn't include certain costs, or they under estimated other costs.

Bottom line when reviewing a Good Faith Estimate of Closing Costs, there are only a few lines that you need to be concerned with when comparing one lender/broker versus another. The rest are just estimates and will vary from broker to broker, but in the end, those other items will be the same cost no matter who you do your loan with because those are third party costs out of our control. Third parties involved are title companies, insurance providers, government, etc.

A Good Faith Estimate usually has line numbers, and it's the 800 series that represent the fees associated with doing the loan, such as appraisal fees, credit report fees, underwriting, processing, tax service, flood certification, courier, wire transfer, broker fee, origination fee, or discount points. These are the only numbers you need to compare when shopping a loan, outside of rate and monthly payment. Forget about all the other numbers and never consider the bottom line number because it includes those estimated items that do not relate to the loan, such as estimated insurance, taxes, and escrows. If you do this, you'll never be suckered into a deal. You'll make your decisions based on the true costs of doing the loan, not some low ball third party estimates. Really, the only fee our brokers control is the mortgage broker fee. The lender fixes their fees, so the rest of those 800 series items are still basically third-party fees.

The Good Faith Estimate also should define your rate and total monthly payment. Just as my other report about interest rates states, the lowest rate isn't the best deal if the lender sneaks in a large monthly mortgage insurance premium to you payment. Look at total payment, and compare that first. A higher rate with no mortgage insurance can be a lower payment than a lower rate with mortgage insurance.

Now that you know what to compare, shopping for the best deal is a whole lot easier. We honestly lose a lot of deals because other companies deceive our borrowers by not including all estimated costs on the Good Faith Estimate. The borrower goes with the lower total number, but is always surprised at closing when they have to come up with so much more money than expected. We'd rather help you be prepared for reality, giving you an honest assessment of all costs involved, even though they aren't our costs, because that's the right thing to do.

We're happy to compare our Good Faith Estimate with any other you've received to help you see the best deal...whichever one that is.

I hope you have enjoyed this special report. We currently have over 40 creative loan programs to fit your needs. Please contact us at 203-483-0061 to set up your FREE No-Obligation consultation where we will meet to tailor a program to fit your needs and comfort levels for monthly payment and investment.

Sincerely,
Chris Rivers
Chrysalis Funding
150 W. Main Street
Branford, CT 06405

Phone: 203-483-0061

P.S. If you would like to get started now please click the following link or image below to fill out a Free No-Obligation Secure Online Application and we will contact you to schedule a free consultation to help you get the home of your dreams with the best terms available...regardless of your credit!