What is the main purpose of a Good Faith Estimate (GFE)?

The main purpose of a Good Faith Estimate (GFE) is to summarize the loan terms for the borrower. This document provides borrowers with a clear understanding of the key aspects of the loan they are considering, including the estimated costs and fees associated with it. The GFE is designed to help borrowers make informed decisions by outlining not only the loan amount and interest rate but also other important variables such as closing costs and monthly payments.

Providing this summary of loan terms allows borrowers to compare different loan offers from various lenders easily and ensures transparency in the loan process, thus fostering trust between the lender and borrower. The clarity and comprehensiveness of this document are essential for empowering borrowers to understand their financial commitments and prepare adequately for the borrowing experience.

While assessing property value and determining interest rates are important aspects of real estate finance, they are not the primary focus of the GFE, which is specifically concerned with summarizing loan terms. Similarly, while it is important for lenders to outline their responsibilities, that is not the central purpose of the GFE.