Know Before You Owe Protects Home Buyers
Effective October 3rd, 2015, new regulations are in effect to protect consumers seeking a home loan or refinancing. As part of the ongoing efforts to restructure the processes for home loans, all lending institutions have new standardized forms they are required to provide, so that you as a homebuyer, will Know Before You Owe exactly how much you owe in closing costs and for the life of your loan. One big issue that has long plagued consumers has been that loan parameters have been allowed to be changed right up to and even on the day of signing loan documents, resulting in additional costs and often larger loan payments. Many homebuyers suffered from increasing monthly payments as their loans were adjusted years after signing. A lot of these buyers ended up losing their homes during the big housing bust of 2008 due to the unexpected additional payments they had to make. The government says no more.
Whether you are buying a new home or refinancing one, at least three days before signing documents, you will be given two new forms which provide all of the final closing costs and all of the monthly payment amounts and calculations that will adjust the payment for the life of the loan. This time frame is to allow you to review and Know Before You Owe prior to signing so you can make an educated decision about agreeing to sign. Across the country lending institutions have worked over the last two years preparing their internal systems and updating processes to include the new forms and be compliant with the new regulations. Billions of dollars have been spent to begin following the new regulations with these forms, but some industry experts are concerned not everyone will be ready. For those that are not, there will be a grace period to correct any issues or noncompliance matters before fees will begin to be assessed should a lender not fully disclose the costs and use the required forms.
The other major concern is how the Know Before You Owe forms will affect the timing of loans. On average a home loan can take up to a month to process. This is the time frame we have gotten used to, understanding that borrowers need to provide all documentation a lender asks for and to account for the amount of loans being processed at any given time. With the new forms, however, it is expected there will be additional time needed to ensure all the calculations are completed correctly and all future adjustments, penalties and fees if applicable to a loan are included. All this additional information to be processed along with the sheer amount of loans coming in could see loans delayed to 60 or 75 days. As a buyer one sure way to lessen the possibility of a delay is to have all your personal documentation updated and ready before you begin the loan process. Another option worth looking into is to get an extended locked rate. By paying an extra fee to lock an interest rate for a longer period of time, you are building in your own extra layer of protection toward knowing what your monthly mortgage payment will be before you sign.
As a Realtor it is my job to help you stay informed of information that will help you make the best decisions for you and your family. When you Know Before You Owe, you will be better prepared for your new mortgage, and less stressed. I am proud to be able to make the real estate process move smoothly for my clients, and I am here to help with all of your real estate needs. If you’re looking for a warm and engaging professional to help you with the purchase or sale of your home, contact me today at 407-234-5313 or by email: Jeff@JeffRoyle.com.