what is good faith - Clear Progress


	For Borrowers
	Home Purchase
	Available Loans
	Lending Strategies
	Calculators
	Common Questions
	The Loan Process
	Safeguard Your Loan
	Glossary
	For Realtors
	About ClearProgress
	Apply for a Loan

What is a Good Faith Estimate?

A good faith estimate is a list of all the costs and fees associated with your loan. Although it is only an estimate, this document is essential for you to compare lenders and make an informed decision. At Clear Progress, we stand behind our estimates and are able to give you an accurate price breakdown.

Request a Good Faith Estimate of Closing Costs From Clear Progress

In order for us to prepare an accurate Good Faith Estimate of Closing Costs for you, we'll need to get some basic information from you such as the loan term, sales price and loan amount. Apply today or call us.

What’s in a Good Faith Estimate?

In all Good Faith Estimates, you’ll see a detailed break down of all your closing costs. Basically, there are four types of fees: lender-related fees, third party fees, prepaid items and your escrow account. They are described below.

L E N D E R R E L A T E D F E E S
Homestead Capital and its lending partners charge fees for their services and provide the borrower with estimates of theses fees upfront at the time of loan approval and an actual cost breakdown prior to loan closing. Listed below is description and brief explanation of common settlement charges.
Loan Origination Fee	A fee imposed by the lender to cover the administrative costs of setting up a mortgage. This includes the preparation of the loan approval, loan funding request, and closing documentation.
Loan Discount	An upfront fee collected at closing in addition to the future interest to be paid on a loan.
Processing	Fee charged by the lender to cover the cost of administrating the loan from application to closing. This typically involves requesting and reviewing the borrower’s credit history, employment history & income documentation, asset documentation, ordering third party reports, and coordinating the loan closing with the title company.
Underwriting	Covers the cost of analyzing the risks involved in making a mortgage loan to determine whether the risk is acceptable to the lender. Underwriting involves evaluating the property as described in the appraisal report and the borrower’s willingness to repay the loan.

E S C R O W A C C O U N T D E P O S I T S
Property Taxes and Insurance	At loan closing the borrower establishes an escrow account with the lender by depositing 2-4 months worth of the annual cost of his homeowner’s insurance, property taxes, and mortgage insurance (if applicable). The lender pays the annual homeowner’s insurance premium and property taxes from the funds in the escrow account.

P R E P A I D I T E M S
Prepaid items collected at loan closing cover certain costs until the first loan payment becomes due. These “pre-paid” items generally include the items below.
Prepaid Interest	The borrower pays interest on his loan from the date of closing until the due date of the first payment. The first mortgage payment after closing is normally due the first day of the second month after closing. By way of example, if the borrower closes the loan on March 15, then the first payment on the loan is due not on April 1, but rather on May 1. In this case the borrower prepays interest on the loan from March 15 to May1 at closing.

T H I R D P A R T Y F E E S
Clear Progress collects fees on behalf of third parties for services they provide in connection with the loan process. For example, Homestead Capital does not perform appraisal inspections, but rather contracts that work with an outside vendor on behalf of the borrower.
Appraisal	Cost associated with determining the fair market value of the subject property. A professional appraiser performs this inspection to provide the borrower(s) and lender with an opinion or estimate of the property’s value. Lenders require appraisal inspections to ensure the property is of sufficient value to support the loan amount. This fee is customarily paid at the time of loan approval.
Credit Report	Fee required to obtain the borrower’s credit report from three credit agencies. The credit report evaluates the borrower’s capacity to repay debts and their history of repaying debts. This fee is typically collected at the time of loan application.
Tax Service	A fee which covers the charge imposed by a tax service agency for monitoring the payment of the borrower’s property taxes. In the event the borrower pays the property taxes himself, the tax service agency will monitor the tax rolls for the life of the loan, informing the lender if the borrower’s taxes become delinquent.
Flood Cert.	Fee required to obtain the borrower’s credit report from three credit agencies. The credit report evaluates the borrower’s capacity to repay debts and their history of repaying debts. This fee is typically collected at the time of loan application.
Credit Report	Pays for the Federal Emergency Management Agency (FEMA) review and report, determining whether the home is located in a mapped flood zone and if flood insurance is required.
Closing/Escrow	Covers the cost of the services of the closing or escrow agent that manages and coordinates the financial transfers and disbursements required to close the loan.
Attorney	A fee charged by an attorney for the preparation of the legal closing documents signed at closing. The attorney represents neither the borrower nor the lender.
Title Insurance	Insurance premium protecting the borrower(s) lender in the event of a claim affecting marketability of the title to the property. The title insurance company issues two policies: an owner’s policy and a lender’s policy. The policies sometimes contain endorsements, special binders, and exemptions.
Tax Certification	Pays for the report determining the actual property taxes for the previous year. This report verifies the taxes are not delinquent at the time the borrower purchases the property.
Recording Fee	Fee charged by the county for filing and recording the necessary loan documents, liens, and transfers in the public record.
Survey	Covers the cost of the report certifying the legal property boundaries, dimensions, borders, and position of improvements located therein.