Section B of Page 2 of the Good Faith Estimate (GFE) has 9 parts. Let's go through them.
Item 3 will be a list of required services that the lender will select. These are services necessary in order to complete your transaction. These charges are subject to a 10% tolerance at settlement, meaning that they may be up to 10% higher (but ONLY 10% higher) at settlement.
It is my understanding that the TOTAL of all items listed in these categories is subject to a 10% difference at closing. In other words, an individual item may in fact cost more than 10% more at settlement, but if another item or items from that section cost less than they were quoted, and the total costs for all items in that section still fit within the 10% tolerance, it can be allowed.
The good news is that lenders who want to be the most competitive may begin to shop around themselves for lower cost providers for these services, in order to keep the total costs they quote down as low as possible, making them look like a better option in a comparison.
Item 4, Title Service and Lender's Title Insurance is a total of ALL title charges except Government Recording charges (which are listed in Item 7). This item is also subject to a 10% cap at settlement, but only if the lender selects the title company or if you select a title company identified by the lender. If you choose your own title company, (not a company identified by the lender) there is no cap on the amount you may be charged at settlement. (Of course, you are most likely to select a company that will cost you less at settlment, but should you choose a more expensive company, the lender cannot be held to the estimate they quote you for using a lender identified company.)
Item 5 is the cost of Owner's Title Insurance. In some states (including Utah) this is most often paid for by the Seller. Even in such an instance, this fee will be listed on the Good Faith Estimate (GFE). Just remember that if this is true in your transaction, you may be able to deduct this amount from your total loan costs for the purposes of determining the cash you need to close the loan.
This item can also increase up to 10%, but once again, only if you (or the Seller) use a lender identified company. Otherwise there is no cap.
Item 6 are the required services that you can shop for. These are services that may be necessary for your transaction. These may include such things as:
These are just examples and are only subject to a 10% tolerance if you use lender identified companies.
Item 7 are the total of Government Recording Charges. These may also increase up to 10% at Settlement.
Item 8 are Transfer Taxes. Fortunately, in Utah, we don't have these. There are some states that do. If your transaction requires payment of a Transfer Tax, there is ZERO Tolerance on this item. It must be the figure you will be charged at settlement.
Item 9 explains the initial costs of setting up your escrow account. (These are your deposits into the account to cover property tax and insurance disbursements.) These are not subject to a cap, as the account will simply need to have enough money in it to pay such disbursements when the time comes. Still, most lenders should be able to get this figure pretty close to what it will be by estimating which month of the year you are likely to close in and the lender's own requirements for escrow account reserves.
Item 10 is the daily interest charge for your loan. Although the TOTAL amount listed here is not subject to any tolerance cap (because it will depend on which day of the month you close whether there are 0 or 30 days of interest charged) the daily amount of interest you will be charged cannot change (as it is a factor of your interest rate).
Item 11 is the cost of Homeowner's Insurance. A borrower usually pays a full year of premium up-front. This item is not subject to a 10% cap, as the borrower is able to select their own insurance and coverage level. (Coverage level must be adequate to protect the collateral for the loan, and usually is subject to approval by the lender.)
Page 3 of the new Good Faith Estimate (GFE) form contains Instructions, an optional Trade-Off table, and a Shopping Chart, as well as a disclosure that your loan may be sold after settlement. We'll cover page 3 next week.
Page 2 of the new Good Faith Estimate (GFE) will look significantly different from Good Faith Estimates of the past.
Section A has 2 parts.
Item 1 is the origination charge, or what the lender is charging you for the loan. This number includes ALL lender fees, combined into one figure. These fees include all the items one used to see listed on Good Fath Estimates as separate line items under such names as:
It may also will include any Yield Spread Premium (YSP), or money that a broker may collect as profit on the back end of your loan transaction. (If there is a Yield Spread Premium and it is not disclosed in Item 1, it will be disclosed in Item 2.)
These will ALL now be shown as one single fee, "Our Origination Charge", or basically, all monies paid to the lender and/or broker in order to obtain the loan.
Item 2 discloses your credit or charge for the specific interest rate quoted. What this table shows is that you, as a borrower, may have had an option to select either a higher or a lower interest rate from the lender's rate sheet.
If you were eligible for a lower rate than you have been quoted, or if there was a credit for the rate selected, that credit will be disclosed here in the second box.
If it will cost money in order to obtain the rate quoted (formerly known as "points") that charge will be shown here in the third box.
If the lender may also choose to select the first box disclosing only that the credit or charge for the interest rate they are quoting you has already been included in (either added to or subtracted from) the origination charge quoted above in item 1. If this box is checked, you may not know the exact amount of the credit or charge, but it shouldn't matter too much as it will all be included in the Total Adjusted Origination Charges in Section A, the total up-front costs to obtain that loan. If this box is checked, however, you may want to ask the lender if you would have qualified for a better rate.
Section A is pretty straightforward. Now on to Section B.
The bottom half of page 1 of the Good Faith Estimate (GFE) form begins with a Summary of your Loan Section. This is where a lot of disclosures regarding the loan will be made.
Some lenders require an escrow account. This section will disclose if an escrow account is required or not and reiterate your base monthly payment amount. Remember that if an escrow account is not required, you will be responsible to keep current all taxes, insurance and other property related charges. Even when one is not required, some borrowers choose to have one set up anyway.
In the event that an escrow account is not required, some lenders may offer an incentive to establish an escrow account anyway. Others may actually assess a penalty or fee in the event you choose not to establish an escrow account, even if not required by the terms of the loan. This penalty will appear as part of the total origination charge and/or will be reflected in the interest rate you are quoted and is said to help cover the costs of monitoring that the taxes and insurance on the property are being kept current by the borrower.
Finally, at the bottom you will see a summary of all Estimated Settlement Charges. These are broken down into 2 sections: Adjusted Origination Charges (All LOAN Costs) and Charges for All Other Settlement Services (All other Costs to close). Both are broken down on the next page of the Good Faith Estimate (GFE) which we'll examine next.
Let's examine the top half of Page 1 of the new Good Faith Estimate (GFE) form.
One of the first changes you will notice about the Good Faith Estimate form is that it now asks for the Loan Originator's email address.
It also asks for a Property Address. Remember, without a property address (the one the borrower intends to get the loan for), the Good Faith Estimate is non-binding, meaning the lender (or loan originator) is not able to be held to fees and rates quoted. However, prior to closing, a Good Faith Estimate will all the required information on it must be completed. This must occur at least 3 banking days prior to settlement.
The next section of Page 1 of the Good Faith Estimate form explains the purpose of the GFE and explains that a borrower can shop for the best loan. It also mentions that the GFE contains a "shopping chart" on page 3 of the form, which we will cover when we get there.
Next is a section explaining 4 important dates relating to the Good Faith Estimate and the loan.
Continue on for an explanation of the rest of the new Good Faith Estimate (GFE) form.
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From my beginning years in the Real Estate industry I noticed that the majority of real estate agents represented Sellers. Training seminars and classes were geared toward increasing listings. The preferred method of finding Buyers was centered on getting more listings. Listings would generate calls and inquiries from Buyers.
I saw Buyer's being sold listings that would benefit the Listing Agent. Were they the best house for that Buyer? Maybe. But were they being shown everything? I don't know. I also saw that some Buyer's were not always being told of their options to get out of a contract based on the terms of that contract if the home turned out to be less than they expected. In short, Buyer's were not receiving full fiduciary duties from their agents. (More on fiduciary duties below...)
Buyers were often treated as customers rather than clients. Still, agents and brokers would convince both the Buyer AND the Seller to sign limited agency agreements, whick limit the amount of representation they receive, while allowing the Listing Brokerage to collect both sides of the re
al estate commission. Consumers are still reporting that they are often not told that they have the right to have an agent that will work ONLY for them.
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properties and we protect our client's best interests throughout the transaction. We are hired directly by our clients and we offer full fiduciary duties to our clients. We do not ask our clients to agree to limited or dual agency.
Buyer's need to know that they can hire an agent that will work exclusively in their best interest, without conflicts of interest. Buyers need to know that there are agents out there who can give BUYERS full agency-level services if they desire them. The Listing Agent cannot offer that Buyer the full set of fiduciary duties. Seller's need to know, when a Listing Agent or Broker commits them to limited or dual agency, just what fiduciary duties they are agreeing to no longer receive.
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Our goal is to help you get the best deal on a home or property where you will enjoy living, spending time with family and entertaining friends! We also want to help you make sound investment decisions based on real facts and our expertise.
Read What Has Been Said by the Media About Exclusive Buyers Agents (EBA)
"We wanted someone who would work with us and not be constrained or biased by their own listings or those from colleagues in their same office or group. Benjamin was extremely responsive and even did virtual walk-throughs with us via video on the web. With his help, we found the ideal home.
"Benjamin came up with a brilliant approach that gave us a real advantage in the negotiations. We closed at a price well below the original asking price. We are extremely pleased with the property. Thank you Benjamin!"
-Vance Checketts Family, Provo, Utah
"I really enjoyed my first home buying experience thanks to your help."
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"We wanted someone that represented us. Someone who understood our ideas, our interests, our needs and stepped in to insure those things were protected.
"Tricia and I would highly recommend Ben Clark/Home Buyer Representation to anyone who wants a great experience in buying a home. Ben was totally committed to helping the process be pleasant and rewarding. Ben has exceptional follow up and he really was on our side, keeping our interests in mind. We were grateful to have Ben with us and many times he kept our builder in check which saved us a lot of money."
-Mark & Tricia Peterson, West Valley, Utah
"Working with Benjamin Clark on the purchase of my first home in Salt Lake City was a relaxing and enjoyable experience. Benjamin's knowledge and experience make it easy, as he seems to have his finger on the pulse of the SLC real estate market. He will work tirelessly to find the right property for you; but most importantly he will be there to negotiate for you, the buyer.
Near the end of the negotiations for my new home, the deal began to unravel at a time when I was overseas on vacation. Benjamin stepped up to the plate and not only saved the deal, but saved me some additional money as well. He was able to spot an opportunity and capitalize on it for my benefit.
When I consider purchasing a new house here in Salt Lake, I will without a doubt count on Benjamin Clark to put me into my new home!"
- Brian Bender, Taylorsville, Utah
"Your honesty and experience made the purchase of our condo smooth. We are looking forward to doing much more business with you."
- Jeff & Jonnica Kairn, Salt Lake City, Utah
"Conventional real estate agents do not have your interest 100 percent in mind. They are always connected to the seller, regardless if they are helping buyers. A Buyer's Agent, however, represents you and your interests entirely. That's why I went with Benjamin Clark. He will keep your needs completely in mind and will always be in your corner."
- Steve Sell, West Jordan, Utah
"Benjamin Clark was recommended to me by my daughter who was very pleased with his help finding her home. I enjoyed working with him very much. He was very personable, friendly and patient. We looked at many properties for several months. Benjamin was very patient and willing to work us into his schedule as often as we wanted.
I liked working with a Buying agent because I knew he was concerned only with my best interests. An Exclusive Buyers Agent doesn't have any properties to sell for another client or agency. They can direct their efforts completely to finding the properties that fit the criteria established with them as well as consider and suggest any options you may have missed or overlooked.
Ben is easy to communicate with personally, by phone or email. He was always available to answer questions and set up tours. He was very prompt in sharing all the newest listings with me, sometimes daily if necessary.
I would work with Benjamin again and have gladly recommended him to others."
- Kristine Higbee, Taylorsville, Utah
Living on the east coast made it challenging to buy a house in Utah. I liked the idea of an exclusive buyer's agent because I needed someone who was looking after my interests first. Ben was an invaluable asset in my search. He previewed house after house for me, communicated well, and didn't try to steer me toward houses I wasn't interested in. On the one day I had to look at houses myself, he helped me evaluate the pros and cons of each property, and even suggested remodeling ideas, one of which I used to create a much-improved entry way in my house. He gave me realistic comps to look at, and made it clear he didn't want me to overpay for the house. He took care of all the closing details while my husband and I were still across the country and went the extra mile to solve some problems that popped up after closing as well. I recommend Benjamin Clark without reservation. Anyone buying a house would be well served by him.
-Susan Theobald, Holladay, UT
We recently moved to the Salt Lake City, Utah area. We had read a few books and they all recommended getting an exclusive buyer's agent since he/she would represent your interests only as a buyer and not the seller's.
We looked up buyer's agents in Utah and we found Benjamin Clark. Ben was very helpful recommending extended stay hotels. Our initial meeting was very informative. We decided to hire him as our agent and started looking at homes with him. He set us up to receive daily emails that had brand new listings so that we would look at the newest listings first. Benjamin worked around our schedules to go out with us every week, including mornings, afternoons and even a couple of late evenings. He was very accommodating and we really appreciated his flexibility.
Benjamin was absolutely great. He was on top of things throughout the whole process. The communication was always excellent. When we finally found our dream house, he did his research and we were able to negotiate on the price in a short amount of time. He even got the seller to pay a large amount towards our closing costs!
Benjamin was very professional throughout the whole process. We had gotten the best possible deal because he worked for US and not the seller. He has the buyer's interest in mind so he will try to get you the best possible deal on the price, the time-frame, and any repairs that need to be done to the house. He never pushed us into looking at any house we didn't want to and he was very patient throughout the whole process. We were very pleased with the whole process. Getting Benjamin Clark as our exclusive buyer's agent was one of the best decisions we made. We would recommend him to all my friends and family and he would absolutely be our first choice if we were to buy another house.
- Ernie Adkins and Tamara Mendez -Happy New Homebuyers- Tooele, Utah
"Benjamin was wonderful to work with. He was an absolute lifesaver in what turned out to be a fairly tricky real estate transaction. We were so glad he was on our side - we would have been lost otherwise! Since Ben works exclusively on real estate purchases, he KNOWS the market, and knows it well. He knows fair market value on properties and can easily point out a good price or help avoid a not-so-good price.Overall, we got great dedication, great service and a great deal! We have recommended Ben and his services to friends and family, and we'll definitely be using him for any future home purchases!"
-The Cieslinski Family, Murray, Utah
"When buying property, I will always use an exclusive buyer's agent. I contacted Ben when my wife and I were interested in purchasing a condo in Park City. He had no problem working with me for several days to show me all of the properties that met my criteria. I never felt pushed as I do with other realtors, he is very mild mannered and easy to work with. He handled all aspects of buying real estate with professionalism. I would definitely recommend him."
-Dirk & Pat Mitchell, Park City, Utah
As a buyer's only agent, Ben Clark helped us beyond our expectations:
1. Ben negotiated for us in such a way that we knew that his commission was secondary to our getting the best price. He helped us hold our ground until the seller budged. It would have been easy for him to say "Just take it." He would have made some extra money on a % basis, but he truly represented our interests.
2. After we moved in, we found some things that needed to be done. Ben went to bat for us and got those things repaired. He could have easily said, "Not my problem."
3. On a couple of the more difficult items, Ben spent many hours researching and communicating with the seller's agent asking for resolution.
I have never seen someone work so hard who has already gotten paid!
-Steve Theobald, Holladay, UT
I wish to take this opportunity to express my support for Ben's excellent service rendered as my real-estate agent. His representation, counsel, and advice are greatly appreciated. His knowledge of real estate, openness and ability to assist others indicates his self-confidence and security as a real-estate agent. Because of his strong commitment and creative ideas he was able to bring a most difficult transaction to a successful conclusion. Without reservation I give Ben my highest recommendation. He is certainly a progressive, knowledgeable realtor, dedicated to his profession and his clients.
-Andy Earle, Pharmacist
Captain, United States Army, Retired
Thank you so much for all your help in finding our new home. We moved in this past weekend and we love it! The animals are in shock from going from our 700 sq. foot rented home to this 1850 sq. foot home! The young cats think it's his own personal playground! The house is great! Thanks again for everything! We wish you and your family the best!
- Jeff and Ina Landry, West Valley
Just wanted to thank you again for your efforts in helping us find and close on our home. We have been very happy here this last year.
-Marjanne and Aaron Corley, West Valley
1. We chose to work with an Exclusive Buyer's Agent because we knew that only our best interests would be represented by our agent. A traditional agent may or may not have been showing us homes that they or their agency has listed. By choosing to work with Home Buyer Representation, we knew that there would be no worries of seeing partner agent homes or any other conflicts of interest.
2. The only other agents that we worked with were those representing the sellers of the homes that we were interested in. Ben was much more personal than these other agents. When we spoke to the other agents, it felt like we were just another sale, with Ben, we felt like he had our needs in mind at all times. Ben also seemed to be much better at follow through than the other agents.
3. I think that the internet has changed the real estate market quite a bit. I am very impressed with how integrated the use of internet technology was used while Ben was working with us. Ben took the time to respond to our e-mails two or even three times in one day! By staying in constant e-mail communication, as well as making himself very available by phone, we really felt like we could ask him anything, anytime.
Additional comments: Throughout the buying process we changed our buying strategy several times. Ben took the time to adjust each time and essentially start our home search over without getting frustrated. Ben make every effort to take care of us as buyers and he saved us an estimated $5,000 on actual costs on a new construction home purchase. Ben also saved us much more by helping to negotiate sweat equity that is normally unheard of in the subdivision we purchased in.
Ben keeps his client load to a minimum to focus on your needs. He was not pushy at all which I really loved, we must have looked at more than 30 or 40 different homes before deciding. I would highly recommend Ben to anyone looking to purchase a new home. We moved into our new home in Oct 2006 and are very happy with all of Ben's services. He is very professional and experienced. everything was such a smooth transaction. Thanks Ben !!
-Tony, Jessica & Alexandra, Daybreak
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