Question:

What does GFE stand for?

Answer:

Beside Government Furnished Equipment, or Game File Extractor, GFE stands for Good Faith Estimate - a quote provided by lenders/brokers upon potential borrowers' requests. What GFE is used for by borrowers is to compare mortgage quotes from different lenders.

While borrowers do use GFEs to compare costs, comparing mortgage loan related charges line by line, there are costs that lenders would disclose at a much later stage, often right before closing. Since there is no law enacted and requiring that lenders stand for their GFE charges, borrowers should not be lured by having some costs omitted from the GFE. What matters is the rate and APR of the loan.

Lenders are required to disclose the APR in the Truth in Lending disclosure statement. However, the APR of the loan will include some costs listed on the GFE and exclude others. Lender/broker points, prepaid interest, PMI, underwriting fees, loan processing fees are commonly included in the APR. GFE costs such as title charges, government recording and additional settlement charges standing on the GFE, including credit report and appraisal usually will not be included in the APR.

Since lenders calculate the APR in different ways, you may need a trustworthy loan officer to guide you through the GFE and APR comparisons when shopping for a loan.

Sometimes the GFE standing costs may differ with several hundreds compared to the final closing costs; sometimes they may differ in the thousands and totally ruin your budget.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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