What you need to know about the new mortgage closing process:

Starting today, October 3, 2015 the previous disclosures and regulations for mortgages (TILA – Truth in Lending Act and RESPA- Real Estate Settlement Procedures Act) are being replaced with TRID-TILA-RESPA Integrated Disclosure. What is TRID and what does this mean for consumers?

TRID combines the old disclosures and regulations into new simpler forms which are the Loan Estimate and the Closing Disclosure. These forms are meant to help home buyers be more informed throughout the process. The new Loan Estimate will show the consumer how much their mortgage will be throughout the life of the loan. It will also show how much the consumer will need to bring to closing. The form will be available to the consumer 3 days after their mortgage application and the consumer then has 10 business days to decide whether to go through with the loan. It is always best to make decisions as quickly as possible to avoid delaying the closing process.

On the new Loan Estimate, every penny the home buyer will need to pay is spelled out. There are 3 different categories of fees. The first is the vendor fees which have a zero tolerance for being inaccurate. These are the lenders charges and they have to be exact. If they increase by even a penny the consumer is entitled to a refund. The second category is the 10% variation which is services that the consumer may shop for. These charges should not vary more than 10%. If they do the consumer, again, is entitled to a refund. The third category is variation permitted which are items that cannot be determined by the lender such as property insurance and HOA fees.

The new Closing Disclosure is similar to the previous HUD1 form with the exception that HUD liked to bundle charges and the new form itemizes every single charge. No two forms will be the same as there are so many different charges specific to each borrower. The charges will be in alphabetical order and the form will be 5 pages. This form must be received by the consumer 3 business days before closing. The expectation is that the lender will mail the form one week ahead of time and that the consumer will have it in hand on time. It is important to review the form as soon as it is received as any changes could delay closing.

This is a major change that people are concerned with. It is expected that the closing process will now take about 2 weeks longer than usual due to these new implementations. Back to back closings are unlikely now due to unexpected delays in at least one of the transactions. It is prudent to use the same closing agent for both the sale of your home and your new purchase for a smooth transaction. The final walk through should now take place about 3-4 days before closing to make sure that if any major changes come up they can be negotiated without delaying the closing process. One last walk through is still permitted the day of closing but if there are major defects they are likely to delay the closing.

Again, the new process is intended to help consumers, not hurt them. As a home buyer or seller you will want to make sure that your Realtor is familiar with this new process to ensure that everything goes as smooth as possible for you.