Understanding Good Faith Estimates
As you are seeking for a good mortgage deal, you will notice that there are two types of comparison tools used to assess the mortgage scheme offered objectively. The first one is of course the annual interest rate of the mortgage itself. You can easily assess how expensive the mortgage you are getting is by calculating the amount of interests you have to pay on a yearly basis. Annual interest rates give you the chance to compare mortgages quickly and pick several options you find cheaper or more affordable. The second instrument, the good faith estimates, is more thorough and offers a more detailed insight of the cost you have to pay for using mortgage to finance your home purchase.
Good faith estimates covers charges and additional costs connected to the mortgage, often including the annual interest rate, to help you understand how much it will cost to finance your home purchase using mortgage as a financial instrument. It includes processing charges (appraisal charges, title search, credit report check, etc.), insurance fees, taxes and other legal fees, and of course several additional fees related to the mortgage such title fees, government recording, and transfer charges. Good faith estimates are very detailed; once you find the mortgage scheme suitable, you should opt for locking these fees and annual percentage rate.