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Does it cost anything for a Good Faith Estimate?
A Good Faith Estimate doesn’t cost anything if you don’t want it too! Today there are many mortgage companies seeking an “application fee” or “broker fee” up front to process anything for you. There are also mortgage companies that will not charge you a dime until the day you close (there’s no risk to you the whole way). Both styles of business are acceptable, but you may choose which one works for you.
I’ll give you a strong reason why mortgage companies charge an up front fee before you will ever see anything in writing from them. A mortgage company is a service company in nature, so the more customers they have the more money they make, (sort of). In the mortgage business you have to close your loan in order for the bulk proceeds to even land in the mortgage company’s door. When you (the borrower) don’t close they don’t get paid. To help cover their costs of taking time to process your loan they might take an upfront fee. They may also take an upfront fee to keep you in their possession. Will you be more or less likely to shop around if you’ve already given a “non-refundable” upfront fee to a mortgage company? If you invest a small amount of money (usually $300-$500) upfront you are a lot less likely to apply and switch mortgage companies mid-stream.
Don’t be scared if the mortgage company you really want to apply with costs you around $300-$500 to apply with them. It could be well worth it if they are reputable, low cost, low rate, and easy to deal with.
If you are still scared to pay an application fee ask if you can get a Good Faith Estimate without fully applying.
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