RISMEDIA, May 16, 2011—Men and women may indulge in the joys of shopping, but when it comes to financing the biggest purchase of their lives, neither is a shop-a-holic. That’s because, according to a new survey from ING DIRECT USA, 56 percent of people buying a home do not use the Good Faith Estimate (GFE) for its original purpose—to shop around and compare mortgage offers.
Despite the federal government’s multiple revisions to the GFE to make it easier to understand and comparison shop for mortgage estimates, 70 percent of homeowners chose a mortgage provider without doing any personal research beforehand, the survey says. The GFE clearly states that consumers should “compare this GFE with other loan offers, so you can find the best loan.”
“The Good Faith Estimate is one of the most crucial documents a homebuyer will receive before making the biggest purchase of their life,” says Arkadi Kuhlmann, President and CEO of ING DIRECT USA, the nation’s largest direct bank. “If it is too complicated and not being used to help homeowners find the right mortgage for them, then the GFE is just a waste of three pieces of paper.”
New Look GFE Still Complicated
The Good Faith Estimate itself could be partly to blame for homeowners’ lack of enthusiasm to comparison shop for a mortgage. Even after the federal government’s attempt to streamline the GFE, more than one in three (36 percent) homeowners described the GFE as being “complicated” or a “waste of time.” Although some homeowners described the GFE as being “simple” or “easy to understand,” 68 percent of homeowners surveyed were unable to correctly identify, for example, the purpose of the Title Services charge on the GFE. Additionally, 53 percent of homeowners spent 30 minutes or less reading and reviewing the GFE. One in ten (11 percent) homeowners never reviewed the document.
Clear up Home Buying Confusion
To bring clarity to the mortgage process and help educate consumers about the value of shopping for a mortgage, today, ING DIRECT introduced Clear Orange —a website and online tool designed to demystify and simplify the Good Faith Estimate.
Clear Orange makes the costs associated with the GFE easier to understand by simplifying technical mortgage jargon, highlighting which mortgage costs are unavoidable and distinguishing between fees based on a home’s purchase price.
Visitors to the site have the option of printing out an easy to understand Good Faith Estimate explanation that they can use while reviewing their own GFE. This document breaks down the technical terms found in the GFE. Additionally, Clear Orange walks users through a step by step tutorial of closing costs that explains why they are charged and who charges for them.
“On average, homeowners ranked buying a home as being more stressful than changing jobs, getting married or having kids,” says Kuhlmann. “Buying a home should be exciting, not stressful. We hope Clear Orange will clear up some of the confusion about buying a home.”
For more information visit www.ingdirect.com.
