New mortgage rules and how to make the majority

Congress and the White House are about to face off on giving lenders more penalty-free time to implement a new rule created to help consumers when closing on a new home.

For the next few months, “sales will be normal”, said Bob Acuff, broker-owner of Re/Max Services in Blue Bell, “but a percentage will get gummed up from inexperienced agents and mortgage brokers and by buyers who don’t get preapproved for a home loan”.

Introduced Saturday from the central Consumer Financial Protection Bureau, the “Know Before You Owe” mortgage-disclosure concept switches four manifestation varieties along with two different new types – the Loan Estimate and of course the Closing Disclosure.

When you apply for a mortgage.

It also provides two key numbers: how much the loan will cost you in terms of principal payments, interest, closing costs and mortgage insurance (if applicable) over the next five years, and how much principal you will have paid off over the same period.

Three days prior to closing, borrowers will receive a form called a closing disclosure. The three-page document lays out the terms of the mortgage, including the loan amount, interest rate and closing expenses.

When you close on a home. Borrowers also will have a minimum of three business days to review their final loan terms and fees before the transaction closes. Previously, lenders provided a similar disclosure just 24 hours in advance, if requested, leaving you little time to spot potential errors. For those covered, TRID means saying good-bye to the Truth in Lending Disclosure Statement, Good Faith Estimate, and HUD-1 Settlement Statement and saying hello to the “Loan Estimate” and “Closing Disclosure”.

Jason van den Brand, CEO of Lenda, an online mortgage refinance company operating in Washington, Oregon and California, said “I think that’s a big one because consumers have been complaining about this left and right because they would get to the signing table and suddenly everything would change”.

Veteran and first-time home buyers alike now only need to concern themselves with two documents.

In addition, says Bankrate.com mortgage analyst Holden Lewis, “there can’t be any last-minute substantive changes in a loan, because any major changes require issuing a new Closing Disclosure and a three-day waiting period”.

The new rules aim to prevent this kind of confusion with the hope of making the lending process easier and more convenient both fir the lender and the buyer.