What to know before closing
5 Things you should know before closing!
The Loan Estimate
Borrowers receive separate forms from their lender at the beginning of the transaction. The Good Faith Estimate and the initial disclosure required under the Truth-in-Lending Act. For loan applications, the creditor will now use a combined Loan Estimate. This estimate intends to replace the two previous forms.
The new Loan Estimate form provides borrowers a timetable. A timetable like the current receipt of the GFE.
The Closing Disclosure
The combination of forms continues at the end of the transaction as well. The HUD-1 Settlement Statement and the final TILA forms combine. They combine into a single Closing Disclosure form. This new five-page form discloses many terms and provisions of the loan. It is also the financial transaction of the closing of the sale.
Closings are now impacted by delivery rules of the new forms
Borrowers are better served by having a short time to review the new Closing Disclosure form. This is before signing their loan documents. As a result the CFPB mandated borrowers have three days to review the form. This is after review of the receipt of the Closing Disclosure and its contents.
Note: The three-day review period starts upon “receipt” of the form by the borrower. Unless some confirmation of the form, the form is “deemed received” 3 days after delivery. The combo of the “delivery time” and “review time” results in 7 business days from mailing to signing.
Title fees may need to be adjusted at closing and explained
The Loan Estimate and Closing Disclosure forms need any listing of settlement service. Services involving title insurance or closing activities preceded by the phrase “Title ”. This will allow the borrower to clearly see all charges in the same area. The disclosure of fees will adjust and explain on page 3 to reflect the following:
The new forms have 7 areas for fees:
The line numbering on the HUD-1 familiar to most is gone. Instead, the fees and charges are on the Closing Disclosure in one of seven areas:
Individual charges within each of these major groupings are alphabetical. Columns are there to separate charges of the buyer, seller (as well as columns for payments at closing).
Your clients will likely receive more than one Closing Disclosure
The Buyer/Borrower will receive a Closing Disclosure several days before the closing. This is also likely a few days before a walk through on the property. Buyers/Borrowers will likely receive a new, adjusted Closing Disclosure at the closing. The disclosure shows any changes that occurred between the disclosure and the closing. This includes adjustments due to the timing of the closing. As well as walk through adjustments and other matters.
Changes may not end there. CFPB mandates that changes in financial disclosure numbers must be re-disclosed, even post-closing.
Crossland Title Agency in Knoxville TN
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10207 Technology Drive Suite 103 Knoxville, TN 37932