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

The Good Faith Estimate (GFE) serves a crucial role in the mortgage loan process by providing borrowers with an overview of expected closing costs. This document is designed to give consumers a transparent breakdown of the fees and costs associated with their mortgage loan, allowing them to understand what to expect when finalizing their loan. By itemizing various costs, such as origination fees, title insurance, and any other necessary charges, the GFE helps borrowers make informed decisions and compare offers from different lenders.

A primary purpose of the GFE is to promote transparency in the lending process, ensuring that borrowers have a clear understanding of the financial obligations they will incur. This early disclosure is intended to help prevent any surprises at the closing table, fostering trust between the borrower and lender.

Other options do not accurately reflect the intention behind the GFE. The document does not disclose loan terms post-closing, finalize interest rates, or specifically approve loan applications; its focus is solely on providing an estimate of closing costs upfront.