Closing Rules Set to Change on October 3rd

If you are planning to buy or sell real estate soon, this is VERY important information for you to know. There is good news and bad news. I always like to hear the bad news first, so here it goes. The BAD news is that the closing process will now take longer than it currently does if you apply for a loan after October 3rd. The GOOD news is that when you actually make it to the closing table, there should not be any last minute changes. It can be frustrating for everyone involved to plan on closing on your new home by a certain date and when the day finally arrives you find out that the lender is not ready to close. When you have scheduled movers, a cleaning crew, utilities to be shut off this doubles the frustration at the least.

Now, probably one of your BIG questions is: How much longer should I anticipate the closing process to take? The National Association of Realtors claims it will add 15 days to your closing period. As title companies and lenders become more familiar with the new process, there should be a shift back to the normal 30-45 day escrow period.

For those of you that like details, read on. For those of you that don't, but might be buying or selling a home soon, you may want to still read on.

The TWO most important changes are two new forms: the Loan Estimate and the Closing Disclosure.

The Loan Estimate replaces the current Truth in Lending disclosure and Good Faith Estimate. Borrowers receive this within three business days after submission of the loan application and it provides a summary of loan terms and estimates of loan and closing costs.

The Closing Disclosure replaces the final Truth in Lending disclosure and HUD-1. It must be received by the consumer at least 3 business days before closing. By having the closing disclosure 3 days prior to closing will help the buyer/seller make proper arrangements with movers, cleaning crews, utilities, etc.

In a nutshell, all of the closing documents will be MORE detailed, but EASIER for consumers to understand. All of the loose ends should be tied prior to you arriving to sign your life away, so there are no surprises when you arrive.

Here is a sample of the new closing statement below from a workshop our broker attended recently.