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Know Before You Owe

Tuesday, 15 September 2015 18:01
child holding bear outside home

The top 5 things homebuyers need to know about changes to mortgage disclosures starting October 3, 2015


1. The Consumer Financial Protection Bureau is instituting new rules on October 3, 2015 that affect mortgages. The new "Know Before You Owe" mortgage disclosure rule is good news because the changes will make it much simpler and easier for buyers to understand all the costs involved!

2. There will be fewer forms:

  • The new 3-page Loan Estimate form (LE) will replace the Good Faith Estimate (GFE) and Truth in Lending (TIL) forms used for the last 30 years. This combined form clearly outlines all the loan information including the estimated cash to close.
  • The new 5-page Closing Disclosure form (CD) will replace the current HUD-1 and TIL. While our closing agents currently prepare the HUD-1 and final TIL, after Oct. 1, Homeowners Advantage will prepare and deliver the CD to the buyer.

3. The CD must be delivered to the buyer/consumer at least three business days prior to the scheduled closing date. This will give you more time to review and understand the terms, payments, closing costs and contact information.

4. Any changes made to the CD after delivery to the buyer may force a three-day waiting period if changes cause the annual percentage rate to be inaccurate, the buyer changes loan product, or a prepayment penalty is added. This includes any changes made prior to closing or at the closing table.

5. The new rules may affect the contract terms that real estate agents help negotiate for either the buyer or the seller. For example, a closing 30 days out may no longer be realistic. The National Association of Realtors recommends adding 15 days to the transaction time (i.e. normal 30 day close pushed back to 45 days).

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