What is a Good Faith Estimate?

You’ll receive this when you apply for a reverse mortgage

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If you are considering a reverse mortgage, you will be given a Good Faith Estimate (GFE) by your lender. This form gives you a comprehensive overview of the terms of your potential mortgage loan, but it does not mean you are locked into your choice.

Use the GFE to better understand what your reverse mortgage might cost you and to compare loan offers.

Key insights

  • Good Faith Estimates are used only in reverse mortgage transactions; other loan types will use a Loan Estimate.
  • You aren’t required to agree to a loan just because you received a GFE.
  • Remember this is only an estimate of how much your reverse mortgage will cost; final costs may vary.

What is a Good Faith Estimate in real estate?

In real estate, a Good Faith Estimate is a document provided by a lender that outlines the estimated costs associated with a mortgage loan. The purpose of a GFE is to ensure transparency between the lender and the borrower, providing a clear picture of what the borrower can expect to pay.

Historically, GFEs were used for all types of mortgages. However, as of Oct. 3, 2015, the GFE was replaced by the Loan Estimate for most mortgage applications under the TILA-RESPA Integrated Disclosure rule. Today, GFEs are primarily used for reverse mortgages.

When to expect your GFE

By law, lenders are required to provide you with a GFE within three business days of receiving your application or other required information.

However, you should note that while a credit report fee may be charged before you receive the GFE, no other fees can be levied until you have received the GFE and indicated that you wish to proceed with the loan.

» MORE: Pros and cons of reverse mortgages

What information is included in a Good Faith Estimate?

“A Good Faith Estimate should contain all of the fees associated with the reverse mortgage as well as the interest rate, margin and the loan size,” said Jay Dacey, president of Jay Dacey Mortgage Team in Minnesota.

Dacey added that this info should be used to compare offers with different lenders. “Keep in mind that a higher fee should lead to a lower rate/margin and vice versa.”

Your GFE will also include any prepayment penalties and an itemized breakdown of charges. Your lender might charge you a credit report fee before it gives you a GFE, but you can’t be charged any other fees until you get this document.

» MORE: How do you pay back a reverse mortgage?

Good Faith Estimate vs. Loan Estimate

In the past, the GFE was the go-to document for estimating costs and terms for all mortgages. However, since October 2015, mortgage lenders have used a Loan Estimate (LE) for most transactions. A GFE is used primarily for reverse mortgage transactions.

The LE includes detailed information about the loan, such as the loan amount, interest rate, monthly payment, estimated closing costs and any prepayment penalties or future changes to the loan terms. It also provides important details like the loan term, loan type and whether there is a fixed or adjustable interest rate.

A GFE and an LE are useful to know the full details of your loan before you agree. However, neither document is a guarantee of approval or fees, nor are you obligated to proceed with the loan after receiving a GFE or LE.


Will I get a Good Faith Estimate for a mortgage?

No. You will receive a Loan Estimate, which is similar to a GFE. The Loan Estimate provides detailed information about the terms, estimated costs and potential adjustments related to your mortgage loan.

Is a Good Faith Estimate the same as a Closing Disclosure?

No, a GFE is provided at the beginning of the loan application process and outlines estimated costs and terms. The Closing Disclosure is a document provided to borrowers before closing and provides final details about the loan terms and closing costs.

How accurate is a Good Faith Estimate?

While a GFE is intended to give borrowers a reasonable estimate, it may not be 100% accurate, as actual costs can vary. Use it to compare costs with other lenders, but know that your fees might vary slightly once you start the reverse mortgage process.

Bottom line

You can expect a Good Faith Estimate within three business days of turning in your reverse mortgage application. Use it to compare reverse mortgage lenders to find out which company offers the lowest rates and fees.

Article sources

ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:

  1. National Consumer Law Center, “Effective October 3: Sweeping Changes to Mortgage Loan Disclosures.” Accessed Jan. 23, 2024.
  2. Consumer Financial Protection Bureau, “What is a Good Faith Estimate (GFE)?” Accessed Jan. 23, 2024.
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