September 29, 2015
The Consumer Financial Protection Bureau (CFPB) is a government agency designed to help consumers and protect their interests against fraud and unfair practices. CFPB issued a statement recently about new federal guidelines that will affect the mortgage lending process, making it easier for borrowers to understand the transaction.
The agency has announced that starting October 3, 2015, those who apply for “most mortgages” on or after that date, “the stress of shopping for a mortgage will be reduced, as our new mortgage disclosure rule takes effect. The new rule and disclosures ease the process of taking out a mortgage, helping you save money, and ensuring you know before you owe.”
What are the changes you should be aware of? According to ConsumerFinance.gov:
- Four overlapping disclosure forms will be streamlined into two forms, the Loan Estimate and the Closing Disclosure.
- Youll have more time to review your closing documents. Currently, lenders must give you your HUD-1 Settlement Statement disclosure 24 hours in advance, if you request it; after October 3, youll receive your Closing Disclosure three business days before you sign the forms and accept the terms of your mortgage, no request needed.
The official site also explains how these changes affect the mortgage lending process:
- The new forms will make it easier to understand complicated mortgage terms.
- The Loan Estimate makes it easier to shop around and compare loan offers from multiple lenders. Consider applying for loans from at least three lenders before choosing a mortgage so you can find the best deal for you.
- The three days required between getting your Closing Disclosure and signing on the dotted line allow you to make sure there arent major changes from the deal you were offered on your Loan Estimate. It also gives you time to ask your lender all the questions you might have about the terms of your mortgage and consult with a lawyer or housing counselor.
If you are applying for an FHA home loan and are interested in speaking to a housing counselor as mentioned above, you can call the FHA directly at 1-800 CALL FHA to request a referral to a local, HUD-approved housing counseling agency.
As the CFPB official site says, being an informed borrower is very important. “You have the right to compare offers and understand the terms before you sign on the dotted line. And the information you use should be clear and easy to understand. After four years of work, these new forms and tools will help you shop for the best deal and avoid costly surprises when you sign on the dotted line. ”
Do you work in residential real estate? You should know about the free tool offered by FHA.com, designed especially for real estate websites. It’s a widget that displays FHA loan limits for the counties serviced by those websites.
It’s simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today: http://www.fha.com/fha_loan_limits_widget
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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