HUD announced that after reviewing comments and recommendations from thousands of consumers and industry insiders it will be revising the Good Faith Estimate (GFE) disclosure and HUD-1 closing document–hopefully to make the fine print more understandable to consumers. The new GFE and HUD-1, which will be required beginning in 2010, come with an instructional page and should make it easier for borrowers to compare the terms of the loan they are getting with what was promised by the lender and disclosed on the GFE.

Until then, borrowers can still make these comparisons at closing. Here’s how you can make sure that you get at the closing table what you were promised in the lender’s office:

 1. Get your documents early. Tell your loan agent that you want your loan documents at least three days prior to closing. Be emphatic that you won’t close your loan unless this happens.

2. Keep copies of your original disclosures and your rate lock.  Make sure the fees are what were disclosed on the GFE and that the rate is what you agreed to lock in.

3. Remember that many times things change during the course of a loan application. Interest rates go up or down while a property is in escrow, borrowers change their minds about mortgages or things come up like credit issues which force the lender to change programs. It’s best to get new estimates in writing any time you change loans, and be sure to get a written agreement when you lock in your interest rate. Keep these  documents so you can compare them to your final HUD-1 form at closing.

4. If in doubt, ask your loan officer to attend your closing to resolve any questions.

5. DON’T SIGN ANYTHING until your questions are resolved to your satisfaction. Once you close your loan you are responsible for complying with its terms.

Until the government (hopefully!) makes it easier on us, borrowers have to take it on themselves to understand their loans before committing to them.

Tags: GFE, good faith estimate, HUD, new disclosure, new HUD forms, understand home loan

This entry was posted on Friday, November 7th, 2008 at 5:00 pm and is filed under Daily Pick. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.