Good Faith Estimate
A Good Faith Estimate (GFE) was a standardized form that lenders were required to provide within three days of receiving a loan application, detailing estimated closing costs and loan terms. This document was replaced by the Loan Estimate form under the TILA-RESPA Integrated Disclosure rules in 2015.
Example
“Before 2015, lenders provided a Good Faith Estimate within three days of receiving a mortgage application, but this has since been replaced by the Loan Estimate form.”
Memory Tip
Think 'Good Faith Estimate = Genuine Financial Expectations' - it was the lender's honest guess about what your loan would really cost.
Why It Matters
Understanding the GFE (now Loan Estimate) helps borrowers compare offers from different lenders and budget for closing costs, preventing surprises at closing.
Common Misconception
Many people think the Good Faith Estimate is still used today, but it was replaced by the more comprehensive Loan Estimate form in 2015.
In Practice
Before 2015, when John applied for a mortgage, he received a Good Faith Estimate showing $8,500 in estimated closing costs, which helped him compare offers from three different lenders.
Etymology
Derived from 'good faith' meaning honest intention (from Latin 'bona fides') and 'estimate' from Latin 'aestimare' meaning to value, creating a trustworthy prediction of loan costs.
Common Misspellings
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