What is the primary purpose of the Good Faith Estimate (GFE)?

The primary purpose of the Good Faith Estimate (GFE) is to provide detailed information on closing costs associated with a mortgage loan. It serves as a tool for borrowers to understand the various expenses they will encounter during the closing process, which include costs for services such as appraisals, inspections, title insurance, and origination fees. The GFE is designed to help borrowers make informed decisions by presenting these costs in a clear and comprehensive manner early in the loan process.

Providing this information in a transparent way helps borrowers compare different loan offers, as all lenders are required to present these estimates consistently. This fosters an environment of accountability and allows consumers to negotiate better terms or shop around for mortgages without hidden surprises at closing.

While the GFE may touch on aspects such as property taxes and insurance indirectly through its estimates, its core function is centered on outlining the anticipated closing costs rather than directly estimating market value, calculating monthly payments, or disclosing specific tax and insurance figures separately.