New guidelines are changing the way all lenders disclose closing costs to homebuyers. The purpose of the new Good Faith Estimate (GFE) is to level the playing field for borrowers, so they can compare loans simply with apples-to-apples comparisons of loan scenarios. In essence, HUD is working to bring all lenders up to the same standard of excellence in reporting closing costs, estimating realistic fees that a buyer should expect to pay at closing with no last minute surprises. While these changes in guidelines will not be substantial for VITEK as we have always strived to adhere to these principles in accuracy, it is important for you to know what these changes mean to you.
Here are some important facts you should be aware of on how these new guidelines may affect you:
1. All lender fees are consolidated in one line, including processing fees, origination fees, etc. Actual costs cannot change from the original estimate without a material change to the loan requested.
2. When fees are being charged to obtain a lower rate, they are broken out and itemized for ease of comparison to other loan programs.
3. Estimated costs for third party settlement providers will be itemized, when lender chooses the provider. Should actual costs increase more than 10% of the original estimates, the lender is responsible for the difference.
4. Services the buyer may shop and choose can change at settlement without the lender being held accountable if the buyer uses a service provider the lender does not identify with. This includes title charges, homeowner’s insurance, and initial deposits for an escrow account.
You can continue to rely on VITEK to provide you with accurate estimates of closing costs!
Nick Lavoie
(916) 209-6567 ext. 103
nlavoie@teamvitek.com
