Using a Good Faith Estimate to Find the Best Loan for You

Getting a good faith estimate from a lender can give you a lot of information. In fact, the information from a good faith estimate will probably be enough to help you make a decision on the loan. A good faith estimate is provided by mortgage lenders when you apply for a loan. They are required by law to give you one that outlines all of the costs associated with the loan. You should have a good faith estimate within three days of applying for a loan. With this information, you can help yourself find the best deal. Here are a few things to consider when dealing with a good faith estimate.

Multiple Applications

You should never agree to a loan until you have seen the good faith estimate from your lender. In fact, you should probably apply for loans at several different locations. Apply online to a few different lenders and visit some lenders locally. Each one of them will give you a good faith estimate. Having multiple good faith estimates gives you ammunition to use to your advantage when dealing with the lenders.

Compare Costs

Once you have several different good faith estimates at your disposal, it's time to do your homework. Review each one of them carefully. They will all have different fees and different names for the fees. However, much of the information will be the same. Some of the things you might see on the estimate include: origination fees, credit report fees, title search, appraisal fees, inspection fees, survey fees, points, and other fees. All of this adds up to the total amount that your closing will cost with each lender.

Look at the total costs and see which lenders are more reasonable than others. Compare this information to the interest rates offered by each, as well as the terms and monthly payment. If one lender has better terms and a lower interest rate, you might be able to overlook slightly higher closing costs. If one particular lender is higher on closing costs and interest rate, you might be able to eliminate them from the process immediately.

Negotiate with Lenders

After you have narrowed down your list to two or three lenders, it is time to deal with them directly. Take your good faith estimates into one of the lenders and show them what other companies are charging. If their fees are higher, ask them to match or beat the offer. Some of the fees that lenders charge are completely unnecessary. If the lender that you are talking to does not want to come down on their price, visit one of the others on your list. Out of all of the lenders that you have visited, one of them will usually emerge as a clear front runner. They will reduce or eliminate many of the fees and get you the best deal available on your loan.