New law is good news for California homebuyers.
As the Consumer Financial Protection Bureau’s (CFPB) “Know Before You Owe” initiative aims to help borrowers better understand their mortgage terms and simplify loan disclosures, a new mortgage closing rule is going into effect. The new law is making it less likely that homebuyers will have to deal with last minute loan issues, but can also lead to longer loan processing periods.
The TILA-RESPA Integrated Disclosure Rule, also known as TRID went into effect on October 3rd and cuts down loan disclosures into just two sets of documents that are only eight pages in all.
What you need to know about the Loan Estimate
The loan estimate of the TRID will detail the terms of your loan including simple “yes” or “no” answers to common questions, projected mortgage payment, estimated closing costs, and information on specific services that you can and cannot shop for.
What you need to know about the Closing Disclosure
The closing disclosure is meant to replace the HUD-1 Settlement Statement and the Truth-In-Lending Statement. You will receive the closure disclosure three days before you are scheduled to close on the loan. The document will provide specific information from your loan estimate, including exactly what you need to pay at closing and the locked in costs of your loan.
Under the new rule, a serious change to the loan will trigger a new three-day review of the loan. This can include a prepayment penalty being added to the terms of the loan, basic product changes to the loan, and an increase of the APR by more than 1/8 of a percentage for fixed rate loans or ¼ of a percentage point for adjustable rate loans.
We at Eastland Escrows hope you will ask for us for all of your escrow needs.