Washington State Mortgages, Made Clear. Buying or Refinancing? Let's find the right loan together.
When you apply for a mortgage, two documents do most of the heavy lifting when it comes to understanding your loan: the Loan Estimate and the Closing Disclosure. Both were introduced in 2015 under federal rules designed to make mortgage costs easier to understand and compare — and they replaced the old Good Faith Estimate and HUD-1 Settlement Statement.
Here’s what each one is, when you’ll receive it, and what to pay attention to. [Read more…]
Effective for new applications on October 5, 2015 and later, the “Good Faith Estimate” was replaced by CFPB’s “Loan Estimate”. This document is similar to HUD’s 2010 Good Faith Estimate (GFE) as it makes the lender be accountable for the Loan Estimate provided to the consumer. It must be delivered within a certain time period, upon specific circumstances and may only be re-issued upon specific circumstances (aka “a changed circumstance”). Similar to the retired 2010 GFE, the Loan Estimate has varying levels of “tolerance” as to how much certain fees are permitted to change from when the Loan Estimate was issued to closing. The lender may be responsible for fees that exceed the allowed tolerance.
It is hard to believe that it was just five years ago when HUD created and required the use of their uniform Good Faith Estimate, often referred to as the 2010 GFE. HUD was very proud of this achievement despite obvious flaws with the document, including (and not limited to) no total monthly mortgage payment (PITI), no total funds due for closing and lenders having to disclose costs that the borrower did not have to pay (such as the owners title policy). The 2010 GFE, which was created to help borrowers shop lenders, was also severely flawed because a lender could not issue the GFE with having a “TBD” address for home shoppers. There was no wiggle room for lenders to re-issue the GFE to add an address.
