mortgage

New form helps to estimate closing costs

"One of the effects of that is, if you're a lender, the shorter the list, the lower the liability," says Tony Farwell, chief executive of Closing.com, an online real estate closing services marketplace.

The upshot, Farwell says, is that a lender's list of approved pest inspectors might have just one or two names on it. Regulators intended consumers to have a lot of choices of service providers, but lenders have an incentive to narrow those choices.

Still, consumers do have the option of ordering off the menu, and Farwell considers that a good thing. "This enlightens the consumer to the notion that they can shop for these services," he says. "Consumers should take a proactive role and research these services. They are expensive."

After you use the GFE's charts to choose the best loan, and after you've gone through the rest of the underwriting rigamarole, the day of closing approaches. A day or so before closing, you're supposed to get a document called the HUD-1 settlement statement. This document itemizes in detail the charges that are summarized in the GFE.

Regulators intended for you to be able to put the GFE and the HUD-1 side by side and compare them for discrepancies. But the HUD-1 looks nothing like the GFE. It's an itemization of each fee, whereas the GFE summarizes costs by category. Comparing the GFE and the HUD-1 is like comparing a car's window sticker with the papers you sign in the sales manager's office at the auto dealership. You can do it, but people around you are going to be impatiently tapping their feet.

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