Pat Starnes' Snippets

Good Faith Estimates -- Such an extremely vital part when shopping for a mortgage. Yes, rate is some what important, but seems to be the primary focus so many times. Not to sound rude or out of character, but a monkey can quote a rate. And I am dead serious about this.

For any of you in the process of buying a home or refinancing your current mortgage, this is a must read.

I have been in the mortgage industry for over 16 years and this subject has to be my biggest pet peeve out there. I have written about this a few times, which you can read below.

• You didn't get a good faith estimate?

• Understanding what a good faith estimate is

• APR vs mortgage interest rate

Basic information to look for when shopping for a good faith estimate.........

1. Only compare the lenders fees, which are located on lines 800 to 820. Don't compare total fees at the bottom. Part of the reason? Go to # 3. And because some loan officers undercut title insurance fees and other 3rd party fees. Yes, it happens.
   
2. Do not compare good faith estimates and the truth-in-lending disclosure (TIL) that shows the APR. It's very easy to manipulate the APR. Lenders can leave out certain fees.
3. Beware of what property taxes the loan officer uses for properties that you are looking at. And make sure that they escrow the correct amount on your good faith estimate, which is on lines 1003 & 1004.
4. Here is my biggest pet peeve !!!!!  You should be given a good faith estimate once your loan officer qualifies you. When your loan officer pulls your credit, takes down your income information, and is able to come back to you with a purchase price, with rate and payment, you are now qualified. If this is the case, they should be able to give you a good faith estimate (GFE) right there and then. Okay, so you called them up. Most of us have e-mail and that loan officer should be able to e-mail you a copy. It doesn't take no longer than 24 hours, no matter how busy they are. Don't allow them to use this as an excuse. And if it takes them 2 days to get you a GFE?  Don't even use their services, no matter what. Not unless they tell you when you will be getting one. Things do happen. But the key thing to remember is if you are qualified to buy a property or to refinance, then you should get one within a half hour. People, your information is already in the system. That is the only way to qualify you. Then next step is just to e-mail it to you. That SIMPLE....
5. One last major point.....  as Lenn Harley mentioned in a comment, you need to obtain all the good faith estimates on the same day. Just one day could make a huge difference. Especially in taoday's market, with rates changing drastically within 24 to 48 hours at times.  You just don't want to shop yourself out of the market.
   

2 quick stories.......

  --  I have a client right now that is looking to buy a home in Maryland. They first went to Countrywide and was pre-qualified for a home of $250,000. I asked them what payment that they didn't want to go over and they said $2,000 a month. I also asked them what the taxes were on the properties that they were looking at in that range. They said $3,400 to $4,200, so I bumped it up $100 extra per year.

They found me online from a few of my blogs. I work in New Jersey and don't know their area well, but I know what questions to ask, as you can see above. The other lender?  She is using taxes of $2,400 a year. I was even shown the GFE. OUCH. You know what, these buyers qualify very easily. But in my worst case scenario, the payment difference is going to be by $150 a month. And you know what, most of the taxes are about $4,100/month. And this lender is local....  There are a few points in this story. A very good loan officer doesn't have to be local. And a very good loan officer needs to ask the right questions, besides knowing how to qualify.

  --  2nd story....  I met a couple two days ago who settled on their home a year ago. It was even a referral from a friend. This loan officer had them bring $2,500 more to settlement, the day of settlement. This is a totally different pet peeve and different subject, which I will write about later. But word to the wise, this is called bait and switch. If your loan officer changes your rate and or costs at the very end, typically the day before or the day of, don't sign the papers if there is a huge difference. Don't let anyone force you to sign, even a lawyer. The only thing that you could lose at that moment is your deposit. But let me tell you something, if you have the right documents, you can take them to court and win in most courses. This is if they won't come back down to what was originally offered. Why can I say this? If anything is ever changed prior to settlement, the lender is suppose to get you to sign a new good faith estimate.

Overall.... choose your mortgage professional wisely and not just based on a great good faith estimate.

FYI.......   If a loan officer doesn't volunteer a good faith estimate right when they qualify you for a mortgage... or it takes longer than 24 hours.... then the loan officer in most cases does't want you to see their good faith estimate. It's sad to say, but usually so true. Don't let anyone tell you differently. They don't want you to compare apples to apples. And in all honesty, why should you give them the benefit of the doubt or even consideration still... no matter how nice they sound. It could cost you money in the long run. WALK AWAY....

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