Early this month, October 3 to be precise, the mortgage industry saw a big change. The TILA / RESPA Integrated Disclosure Rule was implemented by the Consumer Financial Protection Bureau.

Talk about a mouthful! Thankfully, this new rule is also referred to as TRID or the Know Before You Owe rule. It was designed to help borrowers understand the terms of their home financing transactions. Sounds pretty good, don’t you think?

But, what does the new rule really mean? Let’s take a look.

Three Forms Became Two
The HUD-1, Good Faith Estimate (GFE), and the Truth in Lending Act (TILA) disclosure forms have been replaced by two new forms. These two forms are:

  • Loan Estimate – Rather than the GFE and TILA, borrowers will be given anew three-page Loan Estimate within three days of applying for their loan. The intent is to give the buyer more time to review the total cost of their mortgage.
  • Closing Disclosure – This new five-page form is used to disclose many of the loan’s provisions and terms. Additionally, it provides a financial breakdown of the transaction.

Potential Waiting Period

If any changes are made to the Closing Disclosure after it has been delivered to the buyer, this could trigger a three-day waiting period. To avoid any delays, the National Association of Realtors has recommended a walk-through seven days prior to the scheduled closing.

With these changes to the borrowing and lending process, it has been recommended buyers and sellers expect their closing time to take an additional 15 days. Does this additional waiting time stink? In some ways, yes. Is it worth it? If, as a buyer, you have a better grasp on the actual cost of your mortgage, you betcha! By being in the know, you’ll be prepared and able to make the best decision for your long-term success. In our book, that’s always a win.

Want to learn more about TRID? Contact me today!