One of the goals of the new GFE is to allow the Borrower to shop the loan terms and estimated settlement costs among various lenders. Although this is an excellent concept, in reality it is impractical with the new forms. The new GFE is simply confusing and hard to provide a good comparison among lenders. Also the estimated settlement cost on the GFE can change significantly within the 10% and unlimited tolerance areas. Finally the new GFE may not be available until several days after the initial loan application, which limits the time to shop.
Accordingly, the better way “to shop” would be to compare among lenders only the actual loan terms and lender controlled costs (GFE #1, #2) and portions of GFE #3 (appraisal, credit report, tax service fee and flood certification). These are the lender controlled closing costs in the HUD 800 columns. In actuality, the rest of the settlement costs will be the same no matter which lender the Borrower selects (Ex: The settlement attorney and the recording costs will be the same for Lender A vs. Lender B).
Most lenders now can provide borrowers with “worksheets”, “cost example” or “loan summary” forms which mimic the old GFE, so requesting those along with the new GFE will insure accuracy and real costs.
Please contact me if you have any questions.
William D. Tucker, III
Tucker Griffin Barnes P.C.