Editor's note - You can trust the integrity of our balanced, independent financial advice. We may, however, receive compensation from the issuers of some products mentioned in this article. Opinions are the author's alone, and this content has not been provided by, reviewed, approved or endorsed by any advertiser.

Effective January 1, 2010, HUD regulations went into effect requiring lenders to use new Good Faith Estimate and HUD-1 forms in real estate transactions. As a real estate investor and home owner, I’ve had to read through my share of these forms, and they were long over due for an overhaul. The new forms are intended to make understanding the loan information a lot easier. Let’s take a look at each of the forms.

New Good Faith Estimate (GFE)

The GFE is a form lenders and mortgage brokers most give potential home buyers. The new form is designed to help borrowers better understand the terms of their loan. For example, here is how the form describes the home loan:

Good Faith Estimate

As you can see, the form makes it pretty easy to understand the terms of the loan. But one of the really nice features of the new form is how it compares different mortgage options. What was particularly difficult in the past was comparing mortgages that had different fee structures. To help consumers compare different loans, the new Good Faith Estimate form has two sections.

The first section is called the Tradeoff table (click to enlarge):

GRE Tradeoff Table

With home loans, borrowers can select to pay more upfront fees (called points) in exchange for a lower interest rate. You can now ask mortgage companies to complete the Tradeoff table so that you can better compare these options.

The second section allows consumers to fill in a simple table to help compare Good Faith Estimates received from different mortgage brokers. Called the Shopping Card (click to enlarge), here is what the table looks like:

GRE Shopping Chart

All in all, it looks like HUD has done a good job simplifying what was a complicated form for many. You can download the form as a .pdf by clicking here.

New HUD-1 Form

The Good Faith Estimate is the form consumers get when they are shopping for a mortgage. The HUD-1 is the actual settlement statement detailing the loan fees, terms and so on that is received just before the closing. HUD has simplified the HUD-1, too, although the changes do not look as significant to me as with the GFE.

One helpful feature of the new HUD-1 is that it compares the fees that were outlined on the Good Faith Estimate with the actual fees on the HUD-1. Some fees should not change, others are permitted to change by a certain amount. The new HUD-1 makes it easy to see any changes. Here’s part of the form as an example (click to enlarge):

Comparison of GFE and HUD-1

You can download a .pdf of the new HUD-1 form by clicking here. All things considered, both the new Good Faith Estimate and HUD-1 forms seem to be much easier to understand and more consumer-friendly.

Author Bio

Total Articles: 1082
Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Article comments

Evan says:


Do you really think this will matter? I may sound cynical, but those that didn’t understand the old HUD form (only bought one home) they are likely not to understand (or bother to read) the new one.


DR says:

Evan, I think for some it won’t matter, and hopefully they have an honest mortgage broker and a good real estate agent. I do think, however, that the forms a re a big step in the right direction. To me, the best financial regulation are those that seek to inform the consumer, rather than dictate terms to the market.

Chris Duncan says:

There are a lot of critical pieces left out of the new form. The most important:

1. The sales price does not appear anywhere.
2. Total monthly payment includes principle, interest, and mortgage insurance, DOES NOT include homeowners insurance and property taxes.
3. Total amount of money required to close. The total “settlement charges” are not accurate because they consider an upfront mortgage insurance premium on FHA and VA loans as part of settlement charges. They, in fact, are financed into the loan which would change the “initial loan amount” because it doesn’t provide your “base” loan amount before that is added in. And it does not take into account if the seller is paying any part of buyers closing costs and or prepaid items.
4. And another really important piece: What type of loan I have applied for. Where on 3 pages does it tell you that you have applied for FHA, VA, or conventional? NOWHERE!

They say it was designed to ACCURATELY spell out for the consumer what they are getting. But the bottom line is, IT DOESN’T!

May be in the right direction, but far from consumers “benefiting”. Causes more problems than fix them.

James Johnson says:

What is the proper way to disclose the loan term on a balloon note? Is the amortization period necessary?

D Welsh says:

I’ve been looking at the new Good Faith Estimate and found several problems.
1. there is nothing to keep banks from inflating the GFE number so when they show actual they always come in under the original estimate.
2. the instructions are not as clear as they need to be for completing the form.