What’s Negotiable on a Good Faith Estimate?

September 15, 2008 | By Kelley Koehler | Filed Under Loans and Financing 

A beautiful question I found in the list of keywords that people searched on and found my site for today:

What is negotiable on a Good Faith Estimate?

First – what’s a good faith estimate?  It’s an estimate of costs that your lender prepares so that you can better anticipate closing costs and more easily compare loans.  A ‘GFE’, we we call it, details out lender costs, estimated title and escrow costs, recording costs, and whatnot.

So when your lender presents you with this good faith estimate, what parts are negotiable?

Well – lots of it.  At least, the parts that your lender has control over.  Your lender isn’t in charge of the title and escrow and recording costs, they’re just providing those estimates to you more or less as a courtesy.  So your lender can’t do much for you with those.

But what they can negotiate are their own fees and rates.  Tom Vanderwell of Straight Talk About Mortgages has this to say:

When you are shopping for a mortgage lender, you need to look at the entire package, fees and rate.  If you find two lenders who are at the same rate, but one has $200 more in fees, that’s when you have to either decide to go with the other one or negotiate it down to match the fees.

Just remember – when you get a home loan, you’re paying your lender to perform a service for you.  And it matters whether that person has expertise or not – if they can get the money to escrow on time, if they can help you select the right loan based on your needs, if they can reduce your stress during the entire process.  Those things have value too.

Comments

3 Responses to “What’s Negotiable on a Good Faith Estimate?”

  1. Michael Oliver on September 16th, 2008 12:34 pm

    Negotiating your mortgage is most likely the most important financial part of buying a home. Saving a .25% on a 30 year mortgage can add up to tens of thousands of dollars over the span of the mortgage. Buyers should learn all they can about how mortgages work or should hire a real estate agent who is very versed in them and most to be honest are not very knowledgable about them.

  2. Genuine Chris Johnson on September 24th, 2008 9:35 pm

    KK-

    (Hello again).

    Tech tip: torch project management. muy bueno a well spent $9/month.

    Part deux: The ‘negotiate and winnow fees down’ concept isn’t cool when you’re trying to get stewardship & advice. It IS cool if you’re dealing with a refinance, but when you’re messing with a purchase, meh, not so much.

    Anyway, Torch project management is the tool to use to loop in everyone that closing.

    -CJ

  3. Kelley Koehler on September 25th, 2008 11:17 am

    Hi Genuine – will have to look into it. Thanks for stopping by!

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