On August 1, the closing process will change forever.
The familiar HUD-1 settlement form, the Good Faith Estimate, and the Truth in Lending Act (TILA) disclosure forms are going away and will be replaced with the Closing Disclosure and the Loan Estimate forms.
The Consumer Financial Protection Bureau (CFPB) has taken over administration of the Real Estate Settlement Procedures Act (RESPA) from HUD. The CFPB’s goal in discontinuing the familiar closing documents and replacing them with these two new documents is to increase consumer’s understanding of mortgages and disclosures and to make it easier to compare loans. In practice, however, these changes will make the steps leading up to closing more complicated.
How will these changes affect your closing procedures when you buy or sell a home after August 1?
If you are securing a mortgage to purchase your new home, timing will take on critical importance in getting documents to your mortgage lender and title agent. Timing truly will be of the essence in closings. One of the new rules requires all forms to be ready three days prior to closing. The National Association of Realtors is recommending home buyers actually get all closing documentation finalized seven days prior to closing, so when you go into the three-day period, you don’t have to make any changes.
In conjunction with the timing element, making any changes to documents as the clock winds down comes with a cumbersome set of hurdles that will most likely hold up a closing.
Now, more than ever, you need the expertise of a real estate team and mortgage lender who are on top of all the new rules and regulations regarding purchasing a home, mortgage applications and closing documentation. The team members of the Brandee Kelley Group have established a close working relationship with Don Kelly at Affiliated Bank. Together, we offer our clients the benefits of our training, on-going education, experience and knowledge to expertly guide you through the entire process and insure a successful closing.
You can count on us to guide you, our buyers and sellers, effortlessly thru the new mortgage and closing regulations that will soon be imposed by the government.