Good faith estimates (GFEs) protect buyers by disclosing home loan costs when they apply for a mortgage. Lenders must provide a GFE, which lays out the basic terms and expected costs of the loan, within three working days of receiving a mortgage application. Many are willing to provide one before you actually apply, which makes shopping for your mortgage easier.
Other lenders do not issue GFE to loan shoppers. Instead, they provide a “worksheet” or “scenario.” There is nothing wrong with this, but you should be aware that only an actual GFE provides certain protections.
Lenders must issue a new GFEs any time there is a “material” change in your application (for example, you applied for a 30-year fixed loan but then switched to a 5/1 ARM). Your actual closing costs must essentially match the final GFE.
Closing costs are divided into three categories – those which cannot vary from what was disclosed at all (most lender fees fall in this one), those that can come in higher but within certain limits (most of these are services from lender-selected providers), and those that can change by any amount (those are mostly costs from providers chosen by the borrower). We explain more about this in our article: the mortgage closing process explained.