Effective October 3, 2015, new federal mortgage disclosure rules will go into effect. The new disclosure rules protect the home buyer and will apply to most residential real estate loans, including closed-end or restrictive mortgages that cannot be pre-paid, renegotiated or refinanced without penalties.
Loan Estimates/Good Faith Estimates can often be confusing. The new forms are easy to understand and easy to use. The new mortgage rules require that the buyer receive the loan estimate no later than three (3) days after applying for the loan. It also requires that the buyer be given three (3) business days to review the closing statement and ask questions before closing on a mortgage.
The new mortgage rules require that the buyer receive the loan estimate no later than three (3) days after applying for the loan.
Buyers will now have a better picture of their closing costs instead of just an estimate. However, this new change may slow down the closing process a bit. It may take longer to go from application of a loan to closing.
Another big change is that lenders will now be liable for repaying any difference between their estimates and the actual costs. Additionally, the new disclosure rules require lenders to disclose any change greater than 0.125 percent to the annual percentage rate. Lenders need to allowthe buyer up to seven (7) days to acknowledge the change before closing. This newrule will make sure that the buyer is given true and fair disclosures before borrowing money. Make sure you know the new Mortgage Disclosure Rules before you close.