No longer is the GFE a one page form, it is now 3-pages and represents more of an understanding of fees than just fees.

 

In addition, the GFE no longer needs a signature.  It is for reference only; however, we will have the customer sign a form that states they have received the document.

 

Let's start at the top and do each section.

 

IMPORTANT DATES:

#1  This will tell the customer how long the terms are good for.  Unless the loan is locked, normally the terms are good through the end of that day. 

#2  Unless locked, the settlement charges are good for 10-15 days from the date listed on line 1.

#3  How many days the lock it good for or 30-days.

#4  Not applicable if locked, but if floating it will state the customer must lock in their loan for 15 days (normally) before closing.

 

A review of the total loan requested, the term and P&I payment.  It will also state if the interest rate will rise (if adjustable).  This section will also state (by yes or no) if this loan is subject to an increasing loan balance (those nasty negative amoritzation loans), pre-payment penalty (not allowed in NJ) or if the loan has a balloon payment.  All those boxes should be NO.

 

ESCROW INFORMATION:

Yes or No, if there will be tax/insurance escrow.  Normally, this will be a YES.

 

SUMMARY OF CHARGES:

Box A will show immediately if there is any origination charges, which will be detailed on page 2.  There will normally be origination charges of some sort.

 

Box B will show the total amount of all other settlement charges (title, appraisal, daily interest, etc.).  Again, this is detailed on page 2

 

You will also see the total of Box A and Box B.

 

 

This page covers the settlement charges in a little more detail than just a lump sum number in Box A and Box B above.

 

There are 11 lines.

 

Line 1:  The total origination charge.  This is what the bank will charge on the loan. 

 

Line 2:  Shows the rate and three boxes.  Only ONE box will be checked.  Most lenders will only have the first box checked.  If the lender can offer a credit, that number will be in the second box.  If there is a lender credit, the interest rate will be higher than market.  The last box is if there are any bona-fide DISCOUNT POINTS.  This means that if the lender charges POINTS, those points must be used to buy the rate down further.  Most lenders have now called their fees Origination fees (or broker fees) due to the new laws.  The last box is not normally checked unless the customer pays those bona-fide Points in addition to any Origination charge on Line 1.

 

Line 3: Services.  This is where you will see how much the lender estimates the appraisal, credit report, mortgage insurance premium (MIP), etc. will be.

 

Line 4:  Title (Lenders):  The estimate of how much it will cost for the Lender's title insurance.  Normally it's an additional $25.

 

Line 5:  Title (Owner's):  The estimate of how much it will cost for the Owner's title insurance.  The normal charge is $500 for the first $100,000, then $5.25 per thousand above that.  Example:  $200,000 loan.  $550 for the first $100,000, then $525 for the remainder, equals $1025.  ($200,000 = $500.  Remainder of $100,000 at $5.25 per thousand = $525).

 

Line 6:  Required services that the customer can shop for (Attorney, pest inspection, survey, etc.).

 

Line 7:  Government recording:  About $340

 

Line 8:  Transfer Tax:  n/a

 

Line 9:  Initial escrow deposit:  2 months of Homeowners Insurance and 3 months of taxes are normal.

 

Line 10:  Daily interest.  Interest charged from the date of closing to the end of the month.  This is easy to figure out.  Take the loan amount and multiply it by the interest rate then divide by 365.  That will give you the daily interest.  Example:  $100,000 loan at 5% = $5000/365 = $13.69 per day.  If there are 5 days left in that month, that number would be $68.49.

 

Line 11:  Homeowners Insurance:  Whatever the homeowners insurance cost is will go here.

 

It all totals up on Line B (less the origination charge), which is also the same line B as on PAGE ONE.

 

 

 

 

This is just a page for customer comparison.  It shows what fee's and change and by how much (if at all).

 

For example:  Fee's that are quoted that can not change are...

Origination Charge:  When a lender quotes a fee, that's the fee,

Credit report fee

 

Fee's that can change by 10% are...

Title Insurance (Lender and Owner),

Government Recording charges, or

Required services you can shop for.

 

Fee's that can change by any amount include...

Title insurance unless listed by the lender,

Daily interest,

Homeowners Insurance.