Question:

What do Good Faith Estimate of settlement costs depend on?

Answer:

Good faith estimate of settlement costs depend largely on the lender and broker disclosing mortgage closing costs in good faith. There are unpredictable items as the rate and the APR (disclosed on the TIL disclosure statement) and third-party items the lender has no control over, but in general loan officers may be slipping in junk fees and deliberately lower points on the Good Faith Estimate (GFE).

Costs on the GFE such as attorney fees, property taxes and appraisal cannot be predicted with great accuracy. However, the borrower may be presented with a preliminary HUD-1 statement shortly before closing and even then settlement costs will not be final.

HUD is aware that loan officers know exactly what lenders and brokers charge on certain items and could limit Good Faith Estimate costs abuse by forcing lenders to disclose firm settlement costs as they are.

Some online lenders do in fact disclose total closing costs along with rates and points.

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