How the mortgage process just changed
By: Kathryn Vasel
New disclosure rules went into effect in the mortgage world Saturday that require lenders to provide home buyers two new forms that clearly detail their loan terms.
“For consumers, it’s going to be viewed as an improvement in what can be a somewhat scary and intimidating process in the biggest investment of their life,” said David Stevens, CEO of the Mortgage Bankers Association.
The rule, formally known as the TILA-RESPA Integrated Disclosure rule, reduces what used to be four forms from two different government agencies to two forms: the Loan Estimate and Closing Disclosure.
Here’s what buyers can expect:
Comparing different loans
Lenders have to provide potential home buyers a Loan Estimate form within three days of a submitted application.
The three-page form details the terms of a potential loan including: amount, interest rate and whether the figures can change after closing.
Clearly breaking out these figures should make it easier to compare loans from different lenders (yes, you should shop around) to find the best rate and terms. Be sure to pay attention to whether the interest rate is fixed or adjustable and any potential future penalties you could face.
The form will also breakdown estimated closing costs.
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