What is the purpose of the Good Faith Estimate (GFE)?

The purpose of the Good Faith Estimate (GFE) is to provide an estimate of closing costs associated with a real estate transaction. This document outlines the various fees, charges, and costs that a borrower may incur at closing, including lender fees, title insurance, appraisal fees, and other related expenses. The GFE aims to help borrowers understand the financial aspects of closing on a mortgage, allowing them to prepare for the financial commitment involved in the home-buying process.

By detailing these costs upfront, the GFE promotes transparency in the lending process and assists borrowers in comparing offers from different lenders. It also helps consumers make informed decisions and avoid surprises at the closing table, which can otherwise obscure the true cost of obtaining a loan.

While estimating monthly mortgage payments, calculating property taxes, and determining loan eligibility are important aspects of the mortgage process, they are not the primary function of the GFE. Each of these aspects is covered by different tools and disclosures in the lending process, separate from the GFE.