What is the purpose of the Good Faith Estimate (GFE)?

The Good Faith Estimate (GFE) serves a crucial role in the mortgage process by providing borrowers with a detailed estimation of the costs associated with obtaining a mortgage. It is designed to ensure transparency and help borrowers understand the various fees and expenses they can expect when finalizing a mortgage loan. This document typically includes estimates for loan origination fees, the cost of an appraisal, title insurance, and other closing costs. By presenting these costs upfront, the GFE allows borrowers to make informed comparisons between different loan offers and lenders, ultimately aiding in the decision-making process.

The other options do not accurately reflect the GFE's purpose. While net worth assessments and credit score guidance may be important in the lending process, they are not included in the GFE. Similarly, while the GFE may provide some basic terms of the loan, its primary focus is on estimating costs rather than simply disclosing interest rates and terms across lenders.