If you look at what brought on the foreclosure crisis, you’ll see that a lot of people didn’t understand what they where signing, and they didn’t understand the terms of their loans, borrowers said they were blindsided by changes in fees and rates at the closing table and home-buyers complained about the level of disclosure in the mortgage process. Well, those days are coming to an end because in October, the lending and Real Estate industries are making a big shift in the way homes are bought and sold.
Since its inception in 2011, the Consumer Financial Protection Bureau has been working to make the loan process more transparent. Among the changes coming this year is the implementation of what is called the TILA-RESPA Integrated Disclosure rule, which changes the disclosure rules for mortgages. If you’re buying a house after October 03, 2015, here’s what you can expect!
Under the new TRID rules effective with all new applications October 1, consumers will receive two disclosures — one at the beginning and one at the end, as follows:
- Within three days of you applying for a home purchase loan, the lender must send you a (Loan Estimate Form), which provides a detailed line-item breakdown of fees, cash needed to close, rate, terms and costs over the life of the loan. The lender must also obtain your intent to proceed before they can move forward.
- At least three days before closing, the lender must send you a (Closing Disclosure Form), which looks almost exactly like the Loan Estimate, but also separates which costs are paid by the buyer, seller, and third parties. This means you’re reviewing final terms in the same format you saw initially, and you’ve got time to digest it.
To prepare for this, lenders are advising Realtors to allow for 45 to 60 days on a standard contract. Which is significantly more than the 30-45 day contract to close transactions (closing process) that Realtors, buyers, and sellers have come to expect over the last 50 years. So if you’re considering buying or selling a home in the last part of 2015, remember that the best course of action for that is to get under contract before October 3rd. If you’re looking to sell a property, we would love to send you over a home evaluation, or have you visit one of our Premier offices for a listing presentation where we will explain how we can get your home sold for the most money, and as fast as possible. If you’re wanting to buy a home along the Emerald Coast, check out Premier Beach Retreats and begin a search. One of our highly knowledgeable agents will contact you shortly to assist you in making your dream home a reality.
For more information on the TILA-RESPA Integrated Disclosure please contact Justin Lindsey.