What is a "Good Faith Estimate" in mortgage lending?

A "Good Faith Estimate" (GFE) is a document provided to borrowers that outlines the estimated fees and costs associated with obtaining a mortgage loan. This includes key financial aspects such as the loan amount, interest rate, monthly payment estimates, and other costs related to closing the loan, such as origination fees, appraisal fees, and title insurance. The purpose of the GFE is to help borrowers understand the financial implications of their loan and to allow them to compare offers from different lenders accurately.

Providing this estimate early in the mortgage process aids borrowers in making informed decisions and demonstrates a lender's commitment to transparency. It's an essential part of ensuring that consumers are aware of the costs they may incur, allowing for a more straightforward comparison between different financing options.