A Good Faith Estimate (GFE) was a standardized document that provided mortgage borrowers with estimated closing costs and loan terms early in the application process. Since October 2015, the GFE has been replaced by the Loan Estimate (LE) as part of the TILA-RESPA Integrated Disclosure (TRID) rules — commonly called the "Know Before You Owe" regulations. Although the term "Good Faith Estimate" is still widely used in casual conversation, the official document is now the Loan Estimate.
The Loan Estimate serves the same fundamental purpose as the old GFE — giving borrowers a standardized form to compare loan offers from different lenders on an apples-to-apples basis. Lenders must provide the LE within three business days of receiving a mortgage application. The three-page document includes: the estimated interest rate and monthly payment, the total estimated closing costs (broken down by category), the estimated cash to close, and important loan features like whether the rate can change, whether there is a prepayment penalty, and whether there is a balloon payment.
One of the most significant improvements of the TRID system over the old GFE is the concept of cost tolerances. Certain fees on the Loan Estimate have strict limits on how much they can increase by the time of closing. Fees with zero tolerance (like the lender's origination fee and discount points) cannot increase at all. Fees with 10% cumulative tolerance (like third-party services where the lender selected the provider) can increase by no more than 10% collectively. If these tolerances are exceeded, the lender must cure the excess — typically by issuing a credit at closing.
At closing, the final figures appear on the Closing Disclosure (which replaced the old HUD-1 Settlement Statement). The Closing Disclosure must be provided at least three business days before closing, and it includes a comparison section showing how each cost changed from the original Loan Estimate. Borrowers should review this comparison carefully and question any significant increases.
At Beycome Title, we work closely with lenders to ensure our title and closing fees are accurately reflected on both the Loan Estimate and the Closing Disclosure. Our transparent, flat-fee pricing means no surprises — what we quote is what you pay. Use our closing cost calculator for an early estimate, or get your free personalized quote to share with your lender.