Many new home buyers are surprised to find that when they go to closing to finalize the sale, that the costs to close were more than they expected. Unfortunately, the Good Faith Estimate that tells the buyer an estimate of the fees associated with a mortgage loan due at closing, is exactly that – an estimate. Many times these costs increase by the time the buyer gets to the closing table without warning.
There is good news for homebuyers, as of January 1, new federal rules adopted by the Department of Housing and Urban Development took effect. The new rules will implement a redesigned, simplified Good Faith Estimate form to help buyers avoid those closing-table surprises.
Until now the way lenders would provide the borrowers with the estimated fees was complicated and confusing. Under the new rules lenders will all be required to use the same form for their Good Faith Estimates – a three-page document issued by HUD.
There are also new rules that will put a cap on the increases in costs that are indicated on the Good Faith Estimate and guidelines so that fees listed on the initial estimate reflect the actual cost at settlement.