New Mortgage Disclosure Rules Should Simplify Home Buying Process
New mortgage disclosure rules have gone in effect, starting Saturday, October 3rd. This federal change aims to condense and clarify of the paperwork used during a home sale, and to help streamline the home buying process for consumers.
Simplifying the Home Buying Process
Starting on Saturday, the current Good Faith Estimate and Truth in Lending disclosures will be replaced by two new forms: a Loan Estimate and Closure Disclosure. The Good Faith Estimate and Truth in Lending disclosures have long been criticized as complicated, confusing, and hard to read. The new standardized forms will be easy to read and comprehend- stating exactly how much a borrower must pay for closing costs and how much each monthly payment will be as the loan ages and potentially adjusts, right up until its term ends. They will state on the first page the loan amount, interest rate, monthly payments, closing costs, and any prepayment penalties and balloon payments. The forms also list taxes and insurance, and state how payments may change in the future.
Additionally, the forms must be provided to the home buyers at least 3 days prior to closing the loan. Previously, lenders could wait until the day of the closing to make any final changes to the loan- which could occasionally lead to unpleasant last-minute surprises for buyers.
Potential Delays for Fresno Real Estate Sales
Like any new policy change, there are expected to be some hiccups and hurdles along the way while the system catches up. Fresno mortgage lenders and loan officers say they’ve been told to expect closing periods to take a longer time- anywhere from 30 to 45 days.