The recent changes to the mortgage document disclosure process have some real estate professionals concerned with the new time restraints and added measures to close a mortgage loan application. The disclosure changes are made in efforts to make the true costs involved in obtaining a mortgage more transparent.
The industry has long required a host of disclosure documents to be provided to borrowers during the mortgage loan process. The same disclosure form information previously provided in forms such as the “Truth-in-Lending,” “Good Faith Estimate” and “HUD-1 will still be required but they will be combined and the time restraints upon their delivery to the borrower a bit more stringent.
The new forms will be the “Loan Estimate” form which will explain the fees and final costs of the loan and must be delivered to the borrower/buyer within three days after completing a mortgage loan application…which not much different than the former rules of the initial disclosures.
The other required disclosure form is the “Closing” form. This form is the one that will bring some changes to the home buying experience. This form will let you know of your closing costs, the actual cost of the loan, the interest rate and money needed by all parties to the transaction at the closing table. Similar disclosure forms were previously required; however, this new and simplified form will need to be provided to borrowers/buyers no less than three days before closing. This timeframe will prevent those last minute/surprise interest rate changes and extra closing costs that are so prevalent in home purchase closing meetings prior to this change. It was discovered that those frequent closing-cost surprises to borrowers at such a vulnerable period caused many borrowers to enter into loans that were not what they had financially intended.
Mortgage and real estate professionals suspect the mortgage process will be lengthened by an extra two weeks taking the average from 30 to 45 days.
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