When buying a home getting the right kind of mortgage is important. This is why it is recommended that you use a good faith estimate to compare mortgages. A good faith estimate is when the bank that you are trying to get a mortgage from gives you an estimate on how much they think the closing cost will be. Most banks are obligated to give you a good faith estimate within three business days of accepting your loan application. Using a good faith estimate will let you know if you can really afford the mortgage or not. The reason for this is the interest can be low but if you can't afford the closing cost there is a good chance that the mortgage is not right for you.

Another reason why you will want to use a good faith estimate is it will give you an idea on the total cost of a property. If you are investing in a house, it is important to have some idea how much the property will be. The reason for this is if you pay too much to buy a house, the house can make you lose money on a monthly basis. Most of the time the good faith estimates can be different from the real closing cost of the house. It is good to use it to give you a rough idea of what the closing cost will be.

One last reason why you will want to use a good faith estimate is it will give you an idea on how much money you are really willing to spend. If you find the right house, but the house is out of your range because of the closing cost, you can negotiate with the seller to see if he or she is willing to bring down the price. If you do get the seller to bring down the price and you have an idea what the closing cost is, this will give you a better chance that you will not have any last minute surprises. Getting a good faith estimate not only can save you time it can also save you from making costly mistakes.