MALINDA KELLY - Associate Broker - 810-837-1277

THINKING OF BUYING A NEW HOME? DON’T LET TRID IN THE NEWS SCARE YOU!

As the new rules took effect we heard a lot in the news about how it would take more time to close and there would be no more pre-qualifying without a purchase agreement and more. Scary headlines meant to create interest in the news are usually not telling the full story and often are misleading.

First off, let’s understand what TRID really is. It is the acronym for the TILA-RESPA InteDorman-329 Northwood Drive, Sandusky (27)grated Disclosure rule. However, the cfpb (Consumer Financial Protection Bureau) prefers to call it the KNOW BEFORE YOU OWE MORTGAGE INITIATIVE. Since mortgages are often complex, complicated and confusing this new rule does two primary things:

  1. It consolidates and simplifies closing loan disclosures.
  2. The timing of some of the activities in the loan process will be changed.

In actuality the new disclosures have been streamlined and are much easier to read and understand. In effect 4 disclosures where consolidated into 2.  The Loan Estimate and the Closing Disclosure. If you are just getting started in the home buying process, look here for a step-by-step guide to ‘Your home loan tool kit’.

What has, and hasn’t been changed by the new rule in the mortgage process.

  1. Preapprovals and pre-qualifications are unchanged by the rule. Although some banks have become stricter with their internal regulations and will not give qualification until a property is selected. You can still talk to a loan professional to obtain a TBD preapproval to guide you in your home search.
  2. The application process begins with a Loan Estimate. Once you provide your lender with your name, ssn, the address of the home being purchased, the sale price and the amount needed to borrow the lender has 3 business days to provide a Loan Estimate.
  3. You, as a buyer, must indicate your intent to proceed with the purchase. Whether you have approached multiple lenders or just one, if you are to go forward, you must give your lender of choice your intent to proceed. After 10 days without that indication the lender is no longer required to honor the terms offered in the estimate.
  4. Once you indicate intent lenders can charge fees. Payment information cannot be obtained in advance. There is no fee for the Loan Estimate. Once you have decided to use a lender they may then ask for payment for an appraisal, application or other loan processing fees. Some lenders could require payment before proceeding with the verification or underwriting process. Ask what fees a lender charges when applying for your Loan Estimate.
  5. A change in your circumstances may mean a revised Loan Estimate or a revised Closing Disclosure. Not all changes effect the loan process but some common reasons for changes can be things such as an appraisal that comes in higher or lower than expected; your (as buyer) credit status has changed; the lender couldn’t document overtime or bonus or other income provided on the application.
  6. You must receive the Closing Disclosure at least 3 business days prior to closing.
  7. Extra three-day reviews are unlikely. This would happen if there were last minute changes in the closing disclosures and a new 3 day time period was necessary.

As a realtor I have always encouraged the buyers I work with to be preapproved at the beginning of their search for a new home. This way you go into the process with your eyes open and know exactly what you can afford to buy. The new rule wants the preapproval to come after a home has been found. Some lenders will still be doing a ‘TBD’ preapproval  or a pre-qualification for clients so you will still be able to find out where you stand financially in looking for your new home.  Adam Neumann, 586-549-4224, a licensed loan officer with Michigan Mutual, Inc. who does this, says regarding the timing that “communication is key, it’s all about relationships between home buyer and lender. The 45 days you hear about is only a safety net, most loans will still close in 30 days.” Find someone you feel comfortable working with and things will go smoothly throughout the process.

Thinking of buying a new home? Contact me at 810-837-1277 or malindatherealtor@gmail.com

Malinda Kelly, Realtorport sanilac summer