What is the purpose of a Good Faith Estimate?

The purpose of a Good Faith Estimate is to provide an estimate of closing costs for a mortgage loan. This document is designed to give borrowers a clear understanding of the expected fees they will encounter when closing on a mortgage. It details various costs, including loan origination fees, title insurance, and other related expenses, allowing borrowers to better prepare financially for the transaction.

By providing an estimate of these costs upfront, the Good Faith Estimate helps promote transparency and ensures that borrowers are aware of potential expenses before they finalize their mortgage. This can aid in comparing loan offers from different lenders, as they can clearly see the estimated closing costs and make an informed decision.

The other choices do not align with the primary function of a Good Faith Estimate, as it specifically centers on estimating closing costs rather than providing repayment schedules, disclosing interest rates, or summarizing payment histories.