The Good Faith Estimate (GFE) was a document provided by mortgage lenders to borrowers within three days of applying for a loan. It offered an itemized list of expected closing costs, the interest rate, and terms of the loan. The GFE helped borrowers compare different lenders and loan options.
As of October 3, 2015, the GFE was replaced by the Loan Estimate form, a part of the TILA-RESPA Integrated Disclosure rule. The Loan Estimate provides similar information but is designed to be easier to understand and use for loan comparisons.
Although no longer used, the GFE included details such as the terms of the loan, initial interest rate, monthly payment, escrow information, and estimates of closing costs and lender fees.
Before its replacement, the GFE was crucial for borrowers to understand all costs associated with a mortgage offer. It served as an essential tool for financial planning and comparison shopping among different mortgage products.
Understanding the history and evolution of the Good Faith Estimate can offer insights into the current practices and forms used in the mortgage application process, underscoring the industry's move towards greater transparency and borrower understanding.