Are you searching for the lowest refinance rates and fees for your next home loan? Comparison shopping with the Good Faith Estimate is an excellent way to find the best deal for your next home loan. Here are several tips for getting the lowest refinance rates without overpaying when closing on your next home mortgage loan.
Understanding Mortgage Lender Fees
Every home loan requires that the borrower pay fees at closing. Even the so-called "no cost refinance" loans have closing costs; however, in this case you're trading a higher interest rate for the lender paying closing fees for you. The fees you will encounter when refinancing your home fall into four categories: lender fees, government fees, escrow and prepaid interest, and third-party fees.
Some of these fees are completely unavoidable, others can be negotiated down. This is where careful comparison shopping can save you thousands of dollars. The Good Faith Estimate makes it easy to compare refinance quotes from up to four mortgage lenders.
How to Use The Good Faith Estimate
Your Good Faith Estimate (GFE) is an excellent tool for comparing refinance rates and fees if you go about it correctly. First, make sure you're comparing quotes for identical loan programs. It doesn't make sense to compare quotes for 15-year home loans against 30-year mortgage loans. To get an apples-to-apples comparison you need to compare identical loan programs.
Mortgage lenders are required to provide you with a Good Faith Estimate within three business days of receiving your application. Remember that submitting an application to get a copy of the Good Faith Estimate does not obligate you to sign a loan contract if you find a better deal while comparison shopping.
Your Good Faith Estimate outlines important mortgage fees like the loan origination fee. You'll find the originating fee on page two of the GFE, item one of section A. This is the fee paid to the person or lender for their part in arranging your home loan. Don't be afraid to negotiate to pay less for loan origination as this fee varies from one lender to the next.
Remember that the Good Faith Estimate is only a written estimate provided by the lender in "good faith." The final word after locking your interest rate comes from the HUD-1 Settlement Statement. Make sure you get everything you were promised when refinancing in writing before signing the loan contract.
Using The GFE Comparison Chart
Page three of your Good Faith Estimate includes a tradeoff table and shopping chart to compare quotes from up to four lenders. The tradeoff table helps you understand how paying lower settlement charges impacts refinance rates and vice versa. The shopping chart allows you to compare quotes from up to four lenders. Important details of each loan offer are listed by column including loan amount, refinance rate, payment amount, and other important details from the summary page.
Interest rates and fees vary widely from one lender to the next. Investing a small amount of time comparing mortgage refinance quotes with the Good Faith Estimate can save you thousands of dollars on your next home loan.