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Home Buyers Will “Know Before You Owe”

October 28, 2015

house_saleSaturday, October 3rd, 2015 marked the start of new rules for lenders and paperwork for anyone seeking a mortgage. In an effort to help protect consumers from ending up with unexpected loan parameters, the “Know Before You Owe” rules will hold lenders accountable for the mortgage products they sell. There are now new standard forms which are required to be given to buyers a minimum of three days before the signing date, whether a new mortgage or refinanced loan. One form provides the loan estimate, the other all of the closing costs. Until now, lenders could and often did, adjust the final figures on a loan right up to and including the day of signing. This led to many consumers being charged more than expected.

The new forms, which all lenders have to use, have resulted in a re-working of internal systems for these organizations so that they can be in compliance. October 3rd was the deadline and now the forms are in use. There is some concern that loans may be delayed as companies adjust to the new process and work to handle the large influx of new deadlines and information they are now required to provide. In order to meet the three day prior to signing deadline, many lenders are expecting to see delays of 30 or even 60 days in the loan process. With the new forms, lenders not only have to disclose all of the final closing costs and monthly mortgage payment, they must also include any changes in their payment as the loan matures until it ends. This was one of the key complaints from consumers during the big housing boom that went bust in 2008. Many buyers were unaware their payments would significantly increase after a number of years, making it difficult to pay for their mortgage. With “Know Before You Owe” this should no longer be an issue.

No one likes to have delays when it comes to buying or refinancing a home, especially if you are in the process of selling your old one at the same time. So what can you do to help make the process easier? The biggest thing you can do is to have all of your documentation and paperwork ready before you begin the mortgage loan process. Be ready to provide all the required information so your lender can move forward with their part of the process. Another option which may be worth the extra cost, is to get a longer lock on the terms of your loan. There is a fee to extend the time frame rates are locked, but with it you are more secure in what rate you will pay for your mortgage while your lender works through the more in depth disclosure process.

Whatever you decide, when you are ready to buy, the new forms are in place to help make the process easier for you the buyer to understand. The end goal is for you to have all the costs known for the life of a loan up front before you sign, and that is a good thing. As a Realtor® who supports her clients, I am here to help understand when new rules and regulations affect you. When you are ready to sell or buy a home, me and my team are ready to help you through the entire process. Our goal is to make your experience both easy and pleasurable. Contact us today at (925) 634-7820 or by email at

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