Individuals who are looking to become homeowners in 2016 and beyond should know that sweeping changes have taken place in the mortgage industry. Officially known as the TILA-RESPA Integrated Disclosure rule, the new laws are meant to make it easier for borrowers to review and compare loan offers, but they aren’t without their pitfalls. Borrower should learn more about the ins and outs of the new mortgage law to expedite the process and better arm themselves with proper and current knowledge.
Pros And Cons: The New Mortgage Laws
Longer Closing Waits
One of the first things hopeful homeowners should be aware of is that they’re now likely to have to wait longer to close on their homes. Where before a 30-day wait was common, borrowers are now likely to have to wait anywhere from 40 to 60 days before they are able to close. Just as borrowers have to get used to the new rules, the same is true of lenders, so mortgage applicants should have an abundance of patience while waiting to become successful homeowners under the new mortgage law.
Another important fact about the new home loan laws is borrowers won’t be able to make last-minute adjustments to deals, mainly because they have to submit what’s known as a Closing Disclosure form three days before the loan’s closing date. This stipulation can cause just as many problems for lenders as it can borrowers, which might lead to delays.
With this information about the new lending law in mind, homeowners should make sure they have inspections, contingencies and repairs done sooner rather than later. While not being able to make a last-minute change to a deal might be aggravating for some under the new mortgage law, getting things earlier is beneficial for everyone involved.
New Forms and the Improved Terms That Come With Them
While the new law comes with new frustrations, it also comes with new advantages to borrowers. The new forms will include the loan estimate, monthly payment and the loan’s interest rate. In addition to more detailed information, borrowers will now have a solid idea of how much their mortgages will cost them over a five-year period. Under the new mortgage law, lenders are also required to provide borrowers with a summary of their transactions as well as the final loan terms.
Separating Fact From Fiction
With new changes there’s bound to be new misinformation, and hopeful homeowners will do well to properly educate themselves on information that simply cannot be trusted. While it’s true that a major change in a loan, such as the inclusion of prepayment penalties or a new and significantly higher interest rate, can lead to an additional three-day waiting period to draw up a revised disclosure, it’s not true that last-minute agreement alterations made after a walkthrough will result in another lengthy waiting period.
Borrowers Can Do Their Part to Expedite the Process
Anyone looking to buy a home in the future should familiarize themselves with the new mortgage law, even if that means engaging in some lengthy and in-depth reading. Borrowers should be sure to write down any questions or concerns they might have as they’re reading over the law and be sure to go over them with lenders.
Borrowers should also pay close attention to any and all instructions they receive from their loan officers and prepare to submit information as quickly as possible. While there might be waiting periods under the new law, those periods are bound to take longer if borrowers aren’t prompt and thorough when it comes to getting their lenders the information they need when they need it.
The new mortgage law will most certainly take some getting used to for borrowers and lenders alike, but having a clearly defined lending agreement is sure to be agreeable for all parties involved.
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