In a survey released by ING Direct on Wednesday, 56 percent of respondents did not use the GFE to compare lenders' associated closing costs. One in 10 respondents have never even reviewed the document, which lenders must provide within three days of a loan application.
Consumers' continued indifference toward the three-page disclosure comes after recent (and painstaking) efforts to simplify the information for homebuyers. Under the Real Estate Settlement and Procedures Act (RESPA), the Good Faith Estimate was streamlined to give buyers a straightforward look at the special sauce that goes into every home loan. The form itemizes settlement costs, from expected title insurance costs to home inspection fees and taxes. You can download a sample GFE from the Department of Housing and Urban Development (HUD) here.
HUD was so confident in the transparency of the new GFE, in fact, that they projected that homebuyers would save an average of $668 per loan (page 8 of the PDF file, if you're keeping track). The only problem: No one seems to be using it.
The survey reveals that 70 percent of homebuyers chose their mortgage provider without doing any prior research. More than half (53 percent) spent 30 minutes or less reviewing the GFE.
So while shopping for the best home prices may take up the lion's share of homebuyer's time and effort, to simply ignore the very salient (and publicly disclosed!) differences in lenders' closings costs can undo much of that hard work.
To learn more about the Good Faith Estimate and closing costs, visit these AOL Real Estate homebuying guides:
Closing Costs: No Surprises
The Hidden Costs of Homebuying
First-Time Home Buyer's Guide
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