November 29, 2016
Borrowers who buy a home with an FHA loans or any other type of home loan, learn that their closing dates and other details become very important the closer the borrower comes to signing on the dotted line and taking possession of the home.
To help borrowers manage all the details about closing, federal law requires the loan officer to provide a closing disclosure that details expenses, fees, and other information.
The government’s watchdog agency, the Consumer Financial Protection Bureau (CFPB) at ConsumerFinance.gov says of this disclosure, “Lenders are required to provide your Closing Disclosure three business days before your scheduled closing. Use these days wisely”.
The three day period before you close should be used to review your closing details-use it like a closing checklist to make sure everything is in order including the proper spelling of your name, the proper amount of your closing costs, etc.
This disclosure will also project your monthly payments, escrow information, and the amount needed in cash to close the loan. Some areas of the disclosure might not apply to FHA borrowers, such as pre-payment penalties. If you aren’t sure about these portions of your disclosure statement, ask the lender.
The disclosure checklist may sound fairly basic, but if there are errors on the disclosure, you will need to get in touch with your loan officer as quickly as possible to resolve these issues prior to your closing date.
Some things might not be errors per se, but dollar amounts you didn’t expect or thought were higher or lower. What that means for an individual transaction depends greatly on the situation, but it is crucial to resolve these problems as quickly as possible.
And, as the CFPB official site states, if you don’t understand the answers or don’t get the answers you need, it’s important to keep asking questions. Borrowers should fully understand the nature of their home loans, closing costs, insurance fees, and down payment requirements.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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