Buying a new home can be a difficult process, especially when you have trouble understanding the legal terms used in your contracts and other paperwork. Fees aren’t always clear and payments to third parties aren’t always easily viewable. Borrowers were taken back by changes in fees and rates during the closing process. The level of disclosure is also a commonly brought up issue during the mortgage process.
Changes To Disclosure Rules On Mortgages
Since its beginning in 2011, the Consumer Financial Protection Bureau has been working on making the loan process more transparent. This year the TILA-RESPA Integrated Disclosure rule will change the disclosure rules on mortgages. One of the most helpful rule changes is the “Know Before You Owe” forms. These forms will replace the four current forms starting on October 3rd, 2015. The intention of these forms is to be less confusing and help the consumer better understand every step in the loan process including loan terms and fees to be paid. These new forms will be used in every mortgage transaction. It will help to establish conformity in the industry and make it easier to compare rates and fees for mortgages.
“Know Before You Owe”
The Loan Estimate Form will include interest rates, fees for both lender and third-party services such as appraisals and title costs. Lenders will be required to provide this form within three days of a loan application. The Closing Disclosure will include final figure closing costs, prepaid taxes and insurance, payments, fees and mortgage terms and much more. It should make the fees clearer and easier to understand for the consumer. You can see examples of the new and old forms and compare them at the Consumer Financial Protection Bureau website.