KNOW BEFORE YOU OWE…new rule, new mortgage disclosures

New Forms & New Rules

Photo from the Consumer Protection Bureau website

The article by the consumer financial protection bureau helps to explain the recent changes in  the Know Before You Owe mortgage disclosure rule which became effective Oct 3rd, 2015. The required disclosures for getting most mortgages have been redesigned to help you shop around to compare offers and find the loan that’s the best for you. The consumer financial protection bureau will also require lenders to give you more time to review the terms of your mortgage before accepting them, so that you can ask questions of your lender or seek advice from lawyer.

You will now have three business days to review your Closing Disclosure before you close, for most kinds of mortgages. This new rule is a part of the Bureau-wide “Know Before You Owe” mortgage initiative. They have been working to make the costs and risks of financial products and services clearer, in order for the consumer to make better, more informed decisions. Most buyers  felt there wasn’t enough time to review their documents before they were closing, so this new rule gives the buyer time to review the documents and better understand them before signing off on the mortgage loan. There are some things, that if changed about the loan, must be given an additional three day review period. Minor, ordinary changes do not require an additional three-day review period.

You may have been familiar with the terms Good Faith Estimate (GFE) and HUD-1 Statement in the past. These are now being replaced with a more understandable form called the Loan Estimate (LE) and the Closing Disclosure (CD)

Click here for the Loan Estimate (LE) Explainer TOOL

This tool above, will walk you through the loan estimate form so you can understand it thoroughly. It should reflect a particular loan you discussed with your lender. Check to see that everything matches your expectations. If something looks different from what you expected, ask why.

Closing Disclosure (CD) Explainer TOOL

A Closing Disclosure, must be provided to you from your Lender three business days before your scheduled closing. Make sure you use these three days wisely. You need to double check and make sure all the details are correct. If something seems off, you need to ask your lender. You want to resolve any concerns as soon as possible especially if something looks different than what you expected-it needs to be resolved immediately.

The video below from Dawn Moore will help to explain further questions you may have. Remember if you have questions you can ask your lender or title company too.

When should you have the Closing Disclosure (CD)?

threedayclosingdisclosurerule

We hope to provide you with things of great value so you can make educated decisions!

Photo & links from the official website of the United States Government-Consumer Financial Protection Bureau (CFPB).

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