Buying a home will be changing starting Saturday, October 3rd. The new regulations from the Consumer Financial Protection Bureau is called “Know Before You Owe” also known as TRID. It’s a new combination of the Truth in Lending disclosures and Real Estate Settlement Procedures Act (RESPA). The goal of the new forms is to make it very, very easy for a consumer to know everything about their mortgage before they agree to one.
While they figure out how this will all play out, lenders are asking for a minimum of 45 days to close. Bye bye 30-day closings! Also, there’s a new 3-day rule. From the time the loan is completed and the Closing Disclosure is issued (the form replacing our current HUD-1) form, there has to be 3 business days. If anything changes that will impact the loan, your closing could be delayed another 3 days. Sellers, take note.
Here’s my favorite thing about the new forms – they are SO MUCH EASIER TO READ. Below you’ll find an example of the new forms. Very clearly you’ll see if there’s a prepayment penalty, if your loan is adjustable in any way, what your total payment is WITH a condo or HOA fee, when your rate lock expires, and your closing costs. There are very steep penalties in place for loan officers who break any of the rules – so steep that the 3rd offense is $1M, effectively bankrupting most lenders. I’m a HUGE fan of the new regulations. I’ve run into so many bad lenders, and I hope this will weed them out!