Pennsylvania Closing Costs Explanation  & New Good Faith Estimate

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DOWNLOADS

• Mortgage Settlement Costs.pdf
• Settlement Cost Booklet.pdf
• Energy Saving Tips.pdf
• Interest Only Mortgages.pdf
• Lead Hazards in the Home.pdf
• Looking For The Best Mortgage.pdf
• Mold & Mildew.pdf
• Radon.pdf
• Sample Good Faith Estimate.pdf

Home Buying Videos

Here are three great videos produced by the Department of Housing and Urban Development (HUD). You will be redirected to the AnytimeEstimate video page

What are closing costs?

Before I explain the typical closing costs for a loan in Pennsylvania, it's necessary to begin with the "new good faith estimate". Effective January 1, 2010, all lenders are required to provide the borrower with a standardized good faith estimate. The benefit of this new form is that the consumer can easily compare loan offers. In the past, good faith estimates could be confusing . . . and some lenders deliberately obfuscated the closing costs and loan terms. The Department of Housing and Urban Development now requires lenders to provide this form within 3 days of the loan application. Personally, that doesn't make sense, why not require lenders to provide the gfe at application? So, a word of caution, ask for the "new gfe" prior to or at mortgage application.

Page one of the new good faith estimate is easy to comprehend, but then can get confusing:

This section of the Good Faith Estimate is worth noting. This section tells you whether the lender will be "escrowing" the property taxes.

Moving on to Page Two. The estimate is divided in two parts, Block A and Block B - Lender(A) and Third Party(B). The third party costs are fees paid to anyone other than the lender. For example, transfer taxes, pest inspector, homeowners insurance, etc. 

Block A - Lender Fees

Block B - Third Party Fees

Now here's where the wheels fall of the new good faith estimate. At the bottom of Page Two is the "Total Estimated Settlement Charges" - not so. The total is only the settlement fees to the Lender and Third Party providers - NOT YOUR DOWN PAYMENT!

Continuing down the form you will see the following. Now you might think the monthly mortgage payment is $1,173, but, this payment DOES NOT include the real estate taxes, homeowners insurance, pmi or mip or any other monthly cost.

So how much will you need at closing? What's my monthly mortgage payment?

In order to "supplement" the good faith estimate, lenders will provide you with a supplementary "good faith estimate", although it won't be called a good faith estimate because calling it a good faith estimate could get the lender in trouble with HUD. It will be called a worksheet, preliminary this or that, or some name other than a good faith estimate. This worksheet will give you the estimated cash at settlement - with down payment and a mortgage payment that includes all the other nasties like taxes, homeowners insurance, pmi or mip. Now at this point, if you still have the stamina, go to Pennsylvania Closing Costs Part 2