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

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

• A. To outline the buyer's responsibilities
• B. To summarize estimated costs for a mortgage loan
• C. To evaluate the buyer’s creditworthiness
• D. To provide a comparison of mortgage rates

Answer: (B)

The Good Faith Estimate (GFE) serves the important function of summarizing the estimated costs associated with a mortgage loan. This document provides prospective borrowers with a breakdown of expected fees, including loan origination charges, the costs of various services, and other closing-related expenses. By presenting these estimates, the GFE allows borrowers to understand and prepare for the financial obligations of obtaining a mortgage, facilitating informed decision-making. Providing transparency in the costs of a loan is a core component of the GFE, as it helps buyers to budget accurately and compare the financial aspects of different mortgage offers they may receive. This ultimately aids in fostering a more competitive lending environment, as lenders must provide this information clearly and consistently.

The Good Faith Estimate (GFE) serves the important function of summarizing the estimated costs associated with a mortgage loan. This document provides prospective borrowers with a breakdown of expected fees, including loan origination charges, the costs of various services, and other closing-related expenses. By presenting these estimates, the GFE allows borrowers to understand and prepare for the financial obligations of obtaining a mortgage, facilitating informed decision-making.

Providing transparency in the costs of a loan is a core component of the GFE, as it helps buyers to budget accurately and compare the financial aspects of different mortgage offers they may receive. This ultimately aids in fostering a more competitive lending environment, as lenders must provide this information clearly and consistently.