Understanding Your Costs

Within three business days after you have completed the mortgage loan application process, your loan officer will provide you with a variety of documents outlining the costs associated with your loan. The most important of these include the Good Faith Estimate and the Truth-in-Lending Disclosure Statement.

Good Faith Estimate

The Good Faith Estimate (GFE) provides you with an estimate of your mortgage loan terms and settlement charges if you are approved for the loan. These include:

  • A summary of your loan defining the initial loan amount, loan term, interest rate and initial monthly payment.
  • Your escrow account information, such as your property tax and homeowner’s insurance that your lender may require you to include in your monthly payments.
  • Your estimated settlement charges, such as application fee, origination fees, discount points, title charges, etc.

It is important that you read the GFE very carefully and review all fees with your loan officer. At this time, you can evaluate your mortgage application and even explore a few other possibilities before accepting it. You have 10 business days to accept the terms disclosed in your GFE.

Truth-in-Lending Disclosure

You will also receive the Truth-in-Lending disclosure statement, one of the most important forms in the entire mortgage process, three days after completing your loan application. This document allows you to see the total cost of your mortgage under the terms of your mortgage loan, including:

  • Your annual percentage rate, which combines your interest rate and closing costs into a single percentage.
  • Your finance charges, which are the total of the closing costs and the interest that you will pay over the life of your loan stated in a dollar amount.
  • Your monthly payment schedule showing the amount you will have to pay each month and any possible changes to your payment amount.

You will also receive other forms and disclosures after being approved, but these are the most important documents concerning your related costs.