New federal regulation, implemented Oct 3, 2015 is designed to slow down the process of buying a home so that it can be completed in a more thorough manner. In addition, new “TRID” (TILA-RESPA Integrated Disclosure) rules are an attempt to better explain closing costs to a buyer and make sure the lender does a more in-depth credit, income and asset review before allowing a buyer to close on a home loan.
Buyers, what does this mean to you?
First, grab a bottle of wine and settle in:
- To avoid the risk of losing hundreds (if not thousands) of dollars in earnest, option and inspection money, you should ask you lender to review your actual income and asset documentation (ie paystubs, tax returns, bank statements) BEFORE making an offer. Something as simple as a little Avon ® business that loses money on your tax returns could limit your ability to buy.
- The Good Faith Estimate and Truth-in-Lending disclosures NO LONGER EXIST. They have been replaced with a Loan Estimate. It is part of the Initial Disclosure package that will be sent to you early in the process of your mortgage loan once you have a home under contract.
- Your closing costs will increase. Appraisals alone have increased about 25% overnight.
- Make sure your lender and Realtor ® know if you will be unreachable during the home-buying process and/or at closing. This is critical to closing on time.
- All lenders, attorneys and title companies had to re-tool their technology in a very short period of time so initially, there will be delays simply due to systems integration errors.
- The HUD1 Settlement Statement which contained the final accounting of all numbers for both the buyer and seller, NO LONGER EXISTS. It has been replaced with a Closing Disclosure.
- Closings will take longer (expect at least 45 days). Once the loan is through underwriting, all work/bills submitted, approved by all closers and attorneys, you will then receive, review and sign-off on the Closing Disclosure. You must wait another 3-6 business days to “cool off” and make sur you still want to buy the home.
Juli Coen, V.P. Sr. Mortgage Lender and Military Specialist
13750 San Pedro, Ste 620
San Antonio TX 78232
Reprinted by permission from Juli Coen, October 10, 2015