There are some important changes coming for future mortgage borrowers effective for mortgage applications taken after October 3, 2015. This is great news for borrowers to give them a better understanding of their costs and enough time to review the closing statement.

These changes have been brought about by the TILA-RESPA Integrated Disclosure (TRID) rule that is part of the Dodd Frank Reform & Consumer Protection Act.

The result of this legislation overhauls closing documents and institutes timelines for real estate settlement procedures.

Here is what this means to you as a buyer or seller of real estate.

Loan estimates and final closing financial disclosures will be easier to understand.

Disclosures will clarified to be easier to understand for those who don’t work within the mortgage or real estate industry. Loan terms, projected payments and a breakdown of closing costs will be provided in an easier to read document.

In addition, the initial loan estimate form that will be provided to a customer after a loan application has been completed will look similar to the final closing disclosure form signed at the title company. It will be easier for a customer to compare the initial estimate to the final figures because the forms will look similar.

Borrowers will have 3 days to review the final closing disclosure.

Often the first time a buyer or seller is able to review the final closing figures is only hours before they have to sign documents for the largest financial decision of their life.

TRID requires the closing disclosure to be provided 3 days before closing. This change will provide customers with enough time to thoroughly review documents.

What will this mean for buyers and sellers?

  • Fewer last minute changes. Because of the new 3 day rule any changes that effect the financial details of the transaction may require a new disclosure to be issued along with a new 3 day waiting period.
  • Some lenders and title companies may not be prepared for this change causing closing delays. I am confident our recommended mortgage companies and title companies are on top of these changes. Before going under contract on a home it will be a good idea to review which title company and lender will be involved with the transaction to ensure a smooth closing.
  • Some lenders, particularly some of the larger banks will require 45-60 days from the time a contract is accepted until closing. The mortgage companies we recommend have indicated they don’t anticipate significant delays.
  • Because of possible delays it may be more difficult to do simultaneous closings where someone can close on their home and then buy another home the same day. It’s expected we will see an increase of sellers wanting to temporarily lease back their home after closing to avoid needing to move twice.

Overall I believe these changes will be great for consumers. Everyone understanding their financial commitment and avoiding last minute stress over unanticipated closing expenses will be a welcome change for me.

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