How To Read A Good Faith Estimate (GFE)

A good faith estimate (GFE) is a government-mandated document that’s designed to inform you of the exact nature of the proposed home loan, your obligations under the agreement, and other important details. This gives you all the important information you need in one place so you can make an informed decision when purchasing a home. The GFE is not very helpful if you don’t know what it is or how to read it. Here you will find helpful information to better understand what to look for.

Because this is a government document, mortgage companies are all required to use the same document. This is intended to make shopping for mortgages easier by allowing you to compare the same information side by side. Along with requiring that all companies use the same format on the GFE, they are also required to send this document to you within 3 days of receiving your application.

Click here to see what a GFE looks like.

Information Included In the GFEHow to read a good faith estimate

This is a three page document. The document’s parts are all equally important, so pay attention to each section. Even if you’re not particularly well-versed in mortgages and finance in general. This document was designed to have all the important information you need to choose a home loan in a format that was not hard to understand.


The first thing that you will want to look at is the important dates section. This has the dates that the GFE is good through, how long its available, how many days after you lock that you need to go to settlement, and how many days before settlement that you need to lock your interest rate. This section gives you a basic time frame for the loan.


Following the important dates you will find a summary of the loan. For many borrowers this is the most important section of the GFE. This section tells you the loan amount, the loan terms, your interest rate, and the monthly payment. Followed by some yes or no questions that let you know if any of the loan details can change in the future and if there are penalties for getting out of the loan early (a prepayment penalty).


The second page of the GFE deals with the loans origination and settlement charges. This includes a variety of costs associated with originating the loan. If any of these charges do not make sense call the company who provided the GFE and have them walk you through each one. In most cases the explanation will be very straight forward. This section allows you to compare services and prices between different companies.


On the final page of the GFE is a table for you to compare the same loan with different charges. This allows you to see how different configurations would change your interest rate, and monthly payment. Just below that is another table for you to compare GFE’s from different companies. Making it easier for you to see what is better, worse, or the same between offers.

Going Over the Information

There are a few important things to remember when you are going over the information in a GFE. First, it is an estimate so some of the numbers could change, if they do the company you are working with should send you a new GFE with the updated figures. If the numbers don’t make sense call the loan officer who sent it so they can help you understand what it all means.

The information in the GFE is provided as part of the lending process to make it easier for consumers to be informed about the loans that they take out. So if you have, or you’re expecting to have, a good faith estimate be sure to take the time to understand all the information included.

Still need help understanding GFE’s? Give us a call and we can help walk you through your good faith estimate to make sure you are getting a good deal.


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