 TITLE: What Is a Good Faith Estimate? CONTENT: How Does a Loan Estimate Work?\n------------------------------\nWithin three business days of receiving your loan application, each lender or mortgage broker must provide you with a loan estimate form. They may charge you a modest fee (around $20) to cover the cost of checking your credit report and credit score as part of the process.\nTo obtain a loan estimate, you must provide the lender with the following information:\n*   Full name\n*   Annual income\n*   Social Security number (so the lender can pull a credit report)\n*   Address of the property you want to buy\n*   Estimated value of the property (use the listed asking price or adjust as advised by a real estate professional)\n*   Amount you want to borrow (the property value minus the amount you're prepared to make as a down payment)\nDetails in every loan estimate include:\n*   Loan amount\n*   Term length\n*   Interest rate (If the loan has a variable rate, it will also include when the rate will reset, and how it relates to a published market rate.)\n*   Monthly payment amount, including applicable property taxes and insurance costs\n*   Closing costs\n*   Prepayment penalties (if any) and fees charged in case of late payments\n*   Origination fees, and whether they must be paid in full at closing or will be rolled into the monthly payments\n*   Loan Estimate document. The forms share a common three-page format designed to simplify comparison of estimates from different lenders\nMultiple loan estimates can help you shop for the best mortgage deal. Freddie Mac estimates the average American borrower could save as much as $1,500 over the life of the loan by getting just one extra loan estimate when applying for a mortgage; getting five additional estimates could save you $3,000 or more.\nBecause the lender runs a credit check before providing a loan estimate, getting one causes a hard inquiry to appear on your credit report. This can cause a small drop in your credit scores, but there's no need to worry about multiple inquiries causing cumulative damage to your scores: The FICO and VantageScore® credit scoring systems both are designed to accommodate rate shopping, and they treat multiple inquiries for similar loan amounts as one event, as long as they take place within a few weeks of each other. END