The good faith estimate and the HUD 1 settlement statement
Only the US government could simplify the mortgage loan process by increasing the number of pages of both the forms and the explanation but there is some good and some bad to the new good faith estimate and HUD 1 settlement statement that you will get when you apply for a loan and see at closing when you buy a home in Charleston today.
Basically, the forms were created in reaction to the "bait and switch" tactics that some unsavory lenders were employing in the past that only came to light at closing. And unless you wanted to back out of your purchase at the last minute, you basically had to pay some surprising fees to get your mortgage loan and the keys to your new home. The new good faith estimate discloses what the fees are within 3 days of applying for a mortgage and must correspond to the HUD settlement statement at closing either exactly, within 10 percent or fees that can change by any amount depending on what the fees are for. That's good.
And what is especially good is that the HUD 1 now includes the loan summary in very clear and easy to understand language in a very simple form (there must be someone in the government who deserves a raise for this one excellent idea).
But the concept of the new good faith estimate was to enable a borrower to be able to shop for a loan and be able to compare apples to apples. The reality however, is that most people shop for a loan before the lender is required to provide a good faith estimate.
And what the good faith estimate doesn't do that the previous version did is to give you an estimate of the monthly payment, primarily because taxes and insurance are not included.
If you are thinking about buying a home in today's Charleston real estate market, the most important thing you can do is find a reliable lender. And I'm sorry that I still see misleading ads all over the Internet promising ridiculously low mortgage rates from rather suspicious lenders still practicing "bait and switch". That low rate might come with extraordinarily high fees that when added to the cost of the loan no longer makes it such a low rate after all.
It's your money, shop wisely. And please ask me for the names of some excellent lenders who specialize in the Charleston real estate market.