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We all know buying a home involves paperwork: submitting forms, filling out forms, reviewing forms, double-checking forms, notarizing forms, and, finally, signing forms before getting the keys to a new home.
So when mortgage documents change — and they will soon — it is big news. If you buy a home or apply for a home equity loan later this year, you will likely see new disclosure forms that will make it easier to understand the costs of a home loan.
To help homebuyers understand the new disclosures and what to focus on, I plan to do a few blog posts, starting with this one, on the basic points that may help your home buying process go more smoothly with these new disclosures.
In a nutshell, two forms currently given at the start of the mortgage process will be combined into one easier-to-understand form, the Loan Estimate (LE); and two forms currently given at the end of the process will be combined into an easier-to-understand form, the Closing Disclosure (CD).
Not only will you see new forms as early as October, there will be new timeframes for you to review and sign forms. Here are eight tips that may help make your home buying process go smoothly:
1) Avoid the mail: Ask your lender to give you the Loan Estimate and Closing Disclosure in person or electronically to avoid waiting the extra days for the mail.
2) Get a jump on the process: After you receive the Loan Estimate (LE), you have 10 days to decide whether to proceed based on the cost estimates. But you may help move the loan process along by telling your lender to move forward as soon as you finish shopping and are comfortable with your loan choice.
3) Documents, documents, documents: Once you decide to move forward with a lender, provide requested documents to complete the loan as soon as possible. Documentation is as important as ever.
4) Revisions are a big deal: As the process moves forward, if the estimated costs in the LE increase and you receive a revised LE, review it carefully to help resolve questions early in the process.
5) Changing loan products is a big deal: Make changes to the loan product you want early in the process, since any change to the loan product or the annual percentage rate (APR) in the Closing Disclosure (CD) can trigger an additional mandatory three-day waiting period before the loan can close.
6) Get on those inspections: Try to work with your real estate agent and seller’s agent to conduct all home inspections; order reports, such as pest inspections; and clear contract contingencies as early in the process as possible.
7) Take a walk sooner rather than later: Schedule your final walk-through of the property you are buying well before the Closing Disclosure (CD) is issued to help avoid delays in preparing the Closing Disclosure.
8) Don’t surprise your lender: It’s a good idea for you and your real estate agent to tell your lender as soon as possible about any changes to the transaction that may impact the loan or the closing.
Have questions about the new disclosures? Post a comment or question below.Read More ›