That’s changing for the better. Starting on Saturday, October 3, some new federally mandated regulations and forms will help clear things up for everyone.
The new forms, the TILA-RESPA Integrated Disclosures (TRID), combine four forms into two that are easier for borrowers to understand. You may also see these referred to as “Know Before You Owe” forms.
About the New Forms
When you go through the mortgage process, the lender is required to give you these two new forms. One is the Loan Estimate, which you’ll receive early on. Later down the road, you’ll also get the Closing Disclosure so you can review the final loan terms before you head to the closing table.
The Loan Estimate replaces both the initial Truth-in-Lending (TIL) statement and the Good Faith Estimate (GFE).
After providing some initial information to the lender (name, income, estimated property value, etc.), you’ll be sent a Loan Estimate within three business days.
Your Loan Estimate consists of three pages. The first page lists general information about your loan:
- Applicant info and property details
- Loan type, purpose and terms
- Projected payments during the loan term
- Estimated closing costs and how much cash you’ll need at closing
The second page of the Loan Estimate breaks down the closing costs:
- Origination Charges (to cover lender expenses)
- Other Costs (third-party charges, like taxes and homeowners insurance)
- Calculation used to determine estimated cash required at closing
- Adjustable interest rate table, payment table (for ARM loans only)
The last page shows information about your lender and further details to help you choose which loan is right for you:
- Contact info for your lender and loan officer
- Comparisons (consistent table format to make comparing different loans easy)
- Other Considerations (details specific to this loan from this lender)
When you’ve decided on your loan option, you must sign the Intent to Proceed document. Without this consent, your lender cannot move forward with processing your loan.
The new Closing Disclosure replaces both the final Truth-in-Lending disclosure and the HUD-1 statement.
When your loan is ready to close, you’ll have a final discussion with your lender to go over the loan and its terms to make sure you understand and agree to everything. Following this conversation, they will provide you a Closing Disclosure detailing your loan terms.
The Closing Disclosure is designed to be straightforward and covers essentially the same topics as the Loan Estimate with added information related to your escrow account (which holds funds to pay your taxes and insurance). You just have to make sure everything matches what you agreed to previously.
About the New 3-Day Waiting Period
Your lender is required to give you a minimum of three business days to review the Closing Disclosure before your closing can take place. If you request changes to the Closing Disclosure, a new one must be issued, and another three-day review period will begin.
It’s important to acknowledge receipt of the Closing Disclosure as soon as you get it so your closing will not need to be delayed.
That’s the lowdown on the new TRID forms and regulations around the Loan Estimate and Closing Disclosure. Any questions? We’re here to help! Just give us a call or leave a note in the comments.
If so, subscribe now for tips on home, money, and life delivered straight to your inbox.