All new mortgage loan applications have a couple new loan documents for homebuyers that will be simpler and easier to understand.
Here’s what changes you will see as you apply for a new mortgage loan:
The new Loan Estimate will replace the Good Faith Estimate and Truth in Lending statement that was used in the past. Just as with the previous disclosures, a lender is required to provide these within 3 days of receiving a complete loan application. The only real change in these forms is a new comparison call TIP, or Total Interest Percentage. It calculates the total amount of interest that you will pay over the loan term without accelerated amortization, as a percentage of your loan amount. Overall the new estimate is easier to read and outlines all costs associated with the loan that you’ve applied for.
The new Closing Disclosure will replace the HUD-1 Settlement Statement. This form basically mirrors the Loan Estimate and allows the consumer to quickly and easily identify any changes in closing costs from initial application. The big change is that the lender must provide this to the borrower a minimum of three days prior to closing. Should something in the loan change outside the tolerance amount for the Annual Percentage Rate or loan product or payment structure, then a new Loan Estimate and Closing Disclosure will need to be provided and the 3 day waiting period will restart. As long as all parties communicate and work together to ensure all fees are included, you’ll know 3 days prior to closing exactly what amount you’ll need at closing.
If you have any questions, give us a call!