Are you aware of how the mortgage process will change on October 3?
The TILA-RESPA Integrated Disclosure Rule (TRID) will ultimately change the forms used, the timelines of when certain documents need to be executed, and the processes involved with closing. This new rule is roughly 2,000 pages and won’t just affect real estate agents; it will also affect home buyers and sellers. Compliance will be enforced by the Consumer Financial Protection Bureau.
Why the change?
These changes are coming to benefit buyers and sellers of real estate by creating more transparency during the transaction process, and to help consumers better understand what is involved when making a real estate purchase or sale.
How will you be affected?
Any pre-approvals obtained prior to Octtober 3 will not be affected by the TRID guidelines, but all loan applications made after will be required to adhere to the new changes. Major TRID changes involve the following:
- New forms: The new Loan Estimate form will combine the Good-Faith Estimate (GFE) and the Truth-in-Lending Disclosure, which will be distributed to the homebuyer from the lender. This form provides an easy-to-understand overview of key loan features, the loan costs, and any risks associated with the mortgage process.
- Timing requirements: The new Loan Estimate (LE) form must be provided to the homebuyer within three business days after the loan application is filed. The borrower must tehn sign and return a form “Intent to Proceed” to the lender. The lender will send the Intent to Proceed to the borrower with the LE. In order to close on the property the buyer must also be provided with the final Closing Disclosure (CD) three days prior to consummation.
What does this mean?
During the transaction, any changes that would affect the Loan Estimate or Closing Disclosure must be in place with enough time for the above time request to be met. If changes occur, new forms will need to be issued and the 3-day wait period may be required again. This could mean closing delays if extensive negotiations take place in the eleventh hour that cause a change of 1/8 percent or greater in the APR or a change in the loan program.
How can you plan for TRID?
- Complete repair and credit negotiations as early as possible.
- As a buyer, get pre-approved early with a qualified lender.
- Create a strategic plan with your agent. If you’re a seller, consider getting a pre-listing inspection to determine what the buyer may or may not ask for. This will help you to anticipate what requests may come up during the home inspection. Planning ahead will help to ensure the negotiation process stays on track. Also note many lenders will require closing service providers (including escrow and title companies) involved to be SOC1 and SOC2 certified.
- Find an agent who understands this new process. While it’s important to work with a qualified lender, and certified escrow and title companies, it’s just as important to work with a knowledgeable agent who can help you strategize and plan how to have a seamless transaction from start to finish.
Search for an agent who knows how to successfully navigate TRID.
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