New Home Closing Rules Take Effect This October

Closing on your new home is an exciting time — but it also can be an overwhelming process. Home buyers are usually required to sign a seemingly endless pile of documents, most of which are written in terminology not used outside of the housing industry and that can be complicated to understand.

Fortunately, the process is about to get easier. 

Under new rules required by the Consumer Financial Protection Bureau, four closing documents will be merged into two. The CFPB recently announced that the changes scheduled to take effect on Aug. 1 will be delayed until Oct. 3

The Good Faith Estimate and Truth in Lending disclosures will be eliminated and combined into a new single Loan Estimate form. The Loan Estimate must be delivered to the buyer no later than three business days after receiving the application.

In addition, the final Truth in Lending Disclosure and HUD-1 Settlement Statement are being replaced by the Closing Disclosure form. This form must be provided to the consumer a full three days prior to the closing, and if there are changes during that 72-hour period, the closing could be delayed.

This is a big change from the current process that allows the HUD-1 Settlement Statement to be presented to the buyer as late as the day of closing and allows changes to be made to the statement during the loan closing.

These new rules are intended to streamline the loan application process and make it easier for consumers to understand by clearly spelling out the most relevant details all on one page – the interest rate of the mortgage loan, the amount of the monthly payments and a listing of all the closing costs.

For consumers applying for adjustable rate mortgages, the documents will explain how their interest rate and future monthly payments could change based on certain factors.

Article By NAHB.org
Courtesy of First Choice Title Services & Escrow, Inc.

First Choice Title Services & Escrow, Inc

3 SW 129th Avenue, Suite 202

Pembroke Pines, FL 33027

Phone (954) 433-7680

Fax (954) 433-7355maria@firstchoicetitleservices.com