Decipher your home loan’s Good-faith Estimate

5 Tips for Deciphering Your Home Loan’s Good-faith Estimate

By: G. M. Filisko

A good-faith estimate is an approximation of the fees and interest rate you’ll pay on a home loan.

When you’re shopping for a mortgage loan, it’s sometimes hard to understand the jargon lenders use in the good-faith estimate explaining the costs and fees you’ll pay when taking out a mortgage.

When you apply for a mortgage, the lender has three days to give you a good-faith estimate of the fees and interest rate you’ll pay, as well as other loan terms. Here are five tips for using the new three-page form to your advantage.

When you apply for a mortgage, the lender has three days to give you a good-faith estimate of the fees and interest rate you’ll pay, as well as other loan terms. Here are five tips for using the new three-page form to your advantage.

1. Know which fees can increase and by how much

In the past, lenders provided an estimate of the costs involved in getting your home loan, and if those costs rose by the time you closed on your home, tough luck. The good-faith estimate shows some fees the lender can’t change, like the loan origination fee that you pay to get a certain interest rate (commonly called points) and transfer costs.

The form also lists the charges that can increase by up to 10%, like some title company fees and local government recording fees. The lender must cover any increase over that amount.

Finally, the good-faith estimate lists the fees that can change without any limit, such as daily interest charges.

2. Look for answers to basic loan questions

In the summary section, lenders explain your loan’s terms in simple language. Can your interest rate rise? If so, a lender must spell out how much the rate can jump and what your new payment would be if it does. Can the amount you owe the lender increase, even if you make your payments on time? If it can, a lender must show you the potential increase.

3. Evaluate the “tradeoffs” on a loan

In the new “tradeoff table,” you can ask lenders to provide details on the tradeoffs you can make in choosing among home loans. If you’d like the same loan with lower settlement charges, how will the interest rate change? If you’d like a lower interest rate, how much will your settlement charges increase?

4. Compare apples to apples with the shopping chart

Included on the good-faith estimate is space for you to list all the terms and fees for four different loans, so you can make side-by-side comparisons.

5. Know what’s missing from the good-faith estimate

The new form lacks some key information, such as how much you’ll reimburse the sellers for property taxes they’ve already paid on the home. It also doesn’t tell you the amount of money you’ll have to bring to the closing table. Some lenders have created supplemental forms providing that information. If yours hasn’t, ask for it.

10 Ways to Prepare for Homeownership



1. Decide what you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.

2. Develop your home wish list. Then, prioritize the features on your list.

3. Select where you want to live. Compile a list of three or four neighborhoods you’d like to live in, taking into account items such as schools, recreational facilities, area expansion plans, and safety.

4. Start saving. Do you have enough money saved to qualify for a mortgage and cover your down payment? Ideally, you should have 20 percent of the purchase price saved as a down payment. Also, don’t forget to factor in closing costs. Closing costs — including taxes, attorney’s fee, and transfer fees — average between 2 and 7 percent of the home price.

5. Get your credit in order. Obtain a copy of your credit report to make sure it is accurate and to correct any errors immediately. A credit report provides a history of your credit, bad debts, and any late payments.

6. Determine your mortgage qualifications. How large of mortgage do you qualify for? Also, explore different loan options — such as 30-year or 15-year fixed mortgages or ARMs — and decide what’s best for you.

7. Get preapproved. Organize all the documentation a lender will need to preapprove you for a loan. You might need W-2 forms, copies of at least one pay stub, account numbers, and copies of two to four months of bank or credit union statements.

8. Weigh other sources of help with a down payment. Do you qualify for any special mortgage or down payment assistance programs? Check with your state and local government on down payment assistance programs for first-time buyers. Or, if you have an IRA account, you can use the money you’ve saved to buy your fist home without paying a penalty for early withdrawal.

9. Calculate the costs of homeownership. This should include property taxes, insurance, maintenance and utilities, and association fees, if applicable.

10. Contact a REALTOR®. Find an experienced REALTOR® who can help guide you through the process.

Winter Tips: Driving in Snow and Ice

Driving in Snow and Ice

Sources: National Safety Council, New York State Department of Motor Vehicles, Washington State Government Information & Services

The best advice for driving in bad winter weather is not to drive at all, if you can avoid it.

Don’t go out until the snow plows and sanding trucks have had a chance to do their work, and allow yourself extra time to reach your destination.

If you must drive in snowy conditions, make sure your car is prepared (TIPS), and that you know how to handle road conditions.

It’s helpful to practice winter driving techniques in a snowy, open parking lot, so you’re familiar with how your car handles. Consult your owner’s manual for tips specific to your vehicle.

Driving safely on icy roads

  1. Decrease your speed and leave yourself plenty of room to stop. You should allow at least three times more space than usual between you and the car in front of you.
  2. Brake gently to avoid skidding. If your wheels start to lock up, ease off the brake.
  3. Turn on your lights to increase your visibility to other motorists.
  4. Keep your lights and windshield clean.
  5. Use low gears to keep traction, especially on hills.
  6. Don’t use cruise control or overdrive on icy roads.
  7. Be especially careful on bridges, overpasses and infrequently traveled roads, which will freeze first. Even at temperatures above freezing, if the conditions are wet, you might encounter ice in shady areas or on exposed roadways like bridges.
  8. Don’t pass snow plows and sanding trucks. The drivers have limited visibility, and you’re likely to find the road in front of them worse than the road behind.
  9. Don’t assume your vehicle can handle all conditions. Even four-wheel and front-wheel drive vehicles can encounter trouble on winter roads.

If your rear wheels skid…

  1. Take your foot off the accelerator.
  2. Steer in the direction you want the front wheels to go. If your rear wheels are sliding left, steer left. If they’re sliding right, steer right.
  3. If your rear wheels start sliding the other way as you recover, ease the steering wheel toward that side. You might have to steer left and right a few times to get your vehicle completely under control.
    If you have standard brakes, pump them gently.
  4. If you have anti-lock brakes (ABS), do not pump the brakes. Apply steady pressure to the brakes. You will feel the brakes pulse — this is normal.

If your front wheels skid…

  1. Take your foot off the gas and shift to neutral, but don’t try to steer immediately.
  2. As the wheels skid sideways, they will slow the vehicle and traction will return. As it does, steer in the direction you want to go. Then put the transmission in “drive” or release the clutch, and accelerate gently.

If you get stuck…

  1. Do not spin your wheels. This will only dig you in deeper.
  2. Turn your wheels from side to side a few times to push snow out of the way.
  3. Use a light touch on the gas, to ease your car out.
  4. Use a shovel to clear snow away from the wheels and the underside of the car.
  5. Pour sand, kitty litter, gravel or salt in the path of the wheels, to help get traction.
  6. Try rocking the vehicle. (Check your owner’s manual first — it can damage the transmission on some vehicles.) Shift from forward to reverse, and back again. Each time you’re in gear, give a light touch on the gas until the vehicle gets going.

Sources: National Safety Council, New York State Department of Motor Vehicles, Washington State Government Information & Services

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