The Department of Housing and Urban Development (HUD) recently passed down guidelines that change the way loan originators will disclose closing costs to home buyers. There is a new Good Faith Estimate (GFE) that is intended to level the playing field when Buyers are comparing loans making it easier for them to do side by side comparisons of loan scenarios.
What does this mean to you as a home buyer? It means that all lenders must use the same standard of excellence when reporting closing costs to you in terms of realistically estimating fees that you will pay at closing. It should protect you, as the home buyer, from having any last minute surprises.
What are the important Changes?
1. All fees paid to the lender/broker will be consolidated in one line and cannot changed without a material change to the loan
2. If fees are being charged to obtain a lower rate, these will be broken out and itemized
3. Estimates for fees from government recording charges and third party settlement providers will be itemized and the lender is held to a tolerance of 10% for their accuracy
4. Estimates for services that the buyer can shop for and choose (Title, insurance, etc.) can change at settlement without the lender being held accountable
Source: Craig Walker, Mortgage Broker with Cascade Mortgage
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