Travis Genta with Security Home Mortgage joins us today to discuss the New Settlement Procedures Act. Over the last thirty years, we’ve had the same Good Faith Estimate, truth in lending, and HUD-1 settlement statement for the home buying process. That’s all changed as of October 3rd, 2015.
Before you start looking for a home, get pre-qualified. The Consumer Financial Protection Bureau, or CFPB, has been assigned to make the process easier and provide more direct information to the consumer.
Under a law called TRID, or the TILA-RESPA Integrated Disclosure Act, the CFPB has come up with a program called Know Before You Owe. There are two main forms in this program that are designed to help you better understand the closing costs and interest rates.
The first form is called the loan estimate. Once you make a loan application, the lender is required to give you this form within 3 days. When you file a loan application, you provide your name, social security number, the estimated loan amount, the estimated value of the home, the property address, and your income.
The lender then gives you the loan estimate, which is a breakdown of the closing costs, third party costs, the home appraisal, and your credit report.The loan estimate is essentially a combination of the Good Faith Estimate and the truth in lending statement, compiling the two forms into one more understandable form.
Thanks to this form, there will be no surprises once you reach the closing table.
The closing disclosure is another form under TRID that takes the place of HUD-1. The closing disclosure solidifies and explains the exact final details of your loan amount. This must be given to you three days before closing on the property.
Now, we threw a lot of information at you today. If you have any questions for Travis, you can reach him at (801) 420-5600, or visit the Security Home Mortgage website.
As always, if you have any real estate questions, give us a call or send us an email. We look forward to hearing from you!