Home buying is really cumbersome process and get’s emotion at times which makes it even tougher. It has lot of steps starting from finding right house, putting an offer, praying for the offer to be accepted and no multiple offer situation pushing in bidding war. Later, inspection has to come out good, proceeding with Loan approval and finally closing the home. Even though closing comes at the end, the things are in the move with lender, title company and buyer from beginning all working together to get to that final step. It takes time and effort from buyer side to provide all loan related documents, getting the down payment funds ready and finally get to the day of closing.
When you get to the closing table, you are submitted with lots of documents which need to be parsed within an hour with the help of closing officer from the Title company. You would end up signing pages and pages of documents with limited knowledge just trusting the closing officer. I been there many times are buyer and as well as realtor next to my buyers. It is not easy and every time it’s different. At times title company & lender suppose to provide some Good Faith Estimate and HUD Statements ahead of time to go through the numbers to make sure you are paying right amount. But it wasn’t really working well and new Consumer Financial Protection Bureau has taken steps to make it buyers life bit easier.
The purpose of the new forms, which were created by the Consumer Financial Protection Bureau with input from consumers and industry groups, including the National Association of REALTORS®, is to consolidate information and make it simpler for consumers to compare how close their costs are to what was originally estimated by the lender. The first page of the new Loan Estimate and the new Closing Disclosure are formatted in exactly the same way, so agent and you can easily compare costs and note any changes. Expect refinements to the forms after they are released as the CFPB sees how well they work in the real world.
Although the information required isn’t much different, some of the compliance requirements are new. NAR analysts say the new procedures could prove challenging for two reasons.
First, the CFPB is requiring the closing disclosure to be given to the buyer three days before closing. That’s to allow consumers time to look carefully at any deviations from the original estimates rather than make them consider the changes while the closing is underway. That’s a positive change for consumers, but it means if you’re used to getting everything done at the last minute, you’ll have to do a better job of planning ahead to accommodate the new rules.
If there are any changes to the loan product or the interest rate once the closing disclosure has been given to the buyer, that could trigger a new three-day waiting period. Other changes requiring lender approval could add even more time to the waiting period. The additional holding period can be waived in certain emergency situations, such as an impending bankruptcy.
CFPB also created more informative website for consumer to know and aware of their obligations before getting into the home buying process. Go to http://www.consumerfinance.gov/knowbeforeyouowe/ and check out the new disclosure forms and other info to make aware of yourself.
This is really good step forward from Fed following the Dodd Frank Act to help consumers to be more conscious about their financial decision with the help of parties from other sides like lenders and banks.