Lenders Arm Home Buyers With New Mortgage Rate and Fee Quote Documents.
As of October 3, 2015, lenders will have new regulations they need to follow. The new regulation arms home buyers applying for a home loan with a more detailed rate and fee information. Plus, home buyers applying for a home loan will have more time to review the new documents before closing escrow.
Here’s a simple breakdown of the new changes. Today, a home buyer applying for a home loan usually don’t get to see a formal breakdown of all fees until they are at the closing table. As of October 3, 2015, home buyers applying for a home loan will receive a formal breakdown of all the fees three days before heading to the closing table. Plus, within the first three days of applying for a home loan. The buyer receives a new Loan Estimate Form, and until the lender receives the buyers intent to proceed, the lender can not move forward with processing the loan.
In a longer explanation. Today, a home buyer applying for a home loan gets a Good Faith Estimate along with an initial Truth In Lending disclosure within three days of applying for a loan. The Good Faith Estimate allows the home buyer to see their quoted rate, the sum of fees, terms and costs over the life of the loan.
And before closing escrow (usually the day of closing) the lender must provide the home buyer with a formal HUD-1 and a final Truth In Lending Disclosure. The HUD-1 is a line-item breakdown of all fees for the transaction. It shows the final cash needed from the home buyer to close escrow, and it allows the home buyer to see if it is different from the one given in the beginning.
Now, under the new lending rules with all home loan applicants. Three days of applying for a home loan the buyer will get a Loan Estimate Form. The Loan Estimate Form provides a detailed line-item breakdown of fees, cash needed from the buyer to close escrow, rate, terms and costs over the life of the loan. Plus, the lender must receive the buyers intent to proceed before the lender can move forward.
Starting on October 3, 2015, at least three days before closing, the lender must provide the buyer a Closing Disclosure Form. The Closing Disclosure Form looks similar to the HUD-1, with the exception it separates which costs get paid by the seller, buyer, and third parties. And by providing the buyer the Closing Disclosure Form, it allows the buyer to review and feel comfortable accepting the terms at least three days before heading to the closing table.
Even though this new regulation may slow up the buying process, I am a fan of it. Buying a home and getting a home loan is a big deal. And when doing both; you want to know all the details before sitting down at the closing table.
If you are planning on buying a home and getting a home loan, the most important takeaway from all this is talk to a lender about the new lending rules. They will answer all of your questions, and they will provide you with the most current up to date lending information.
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