TRID AND WHAT IT MEANS FOR HOMEBUYERS
September 22, 2015
Beginning Oct. 3rd, homebuyers will benefit from new legislation courtesy of the Consumer Financial Protection Bureau (CFPB) that will make the mortgage process quicker, more transparent and easier to understand.
The act, the TILA-RESPA Integrated Disclosure (TRID) Rule, combines facets of the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) to enforce new regulations that will solve many of the problems homeowners have reported occurring during the closing process.
Once in effect, TRID will require lenders to provide you with two forms: the Loan Estimate Form and the Closing Disclosure Form, both of which will replace existing forms to simplify the process.
The Loan Estimate Form will give you the key details of the prospective loan, including terms of the loan, projected payments and closing costs, and a means of comparing the loan with other loans. A loan estimate must be given to you no more than three business days after you submitted the initial loan application. Lenders also cannot charge you any fees (save for credit report fees) until you decide to proceed with the loan, a decision you are given 10 days to make.
The Closing Disclosure Form brings together all of the costs of the loan transaction in one convenient place. The Closing Disclosure form must be given to you at least three days before you close on the loan, giving you time to consider the loan and ensuring that there are no surprises at the closing. The final Closing Disclosure Form must also articulate the exact costs you’ll stand to pay for the mortgage, including costs that changed at the closing table.
The CFPB has also provided an excellent guide for walking you through the lending process, giving access to samples of the same forms you’ll be signing and explaining their significance.
REALTORS® are well-prepared to help prospective homebuyers navigate through the new landscape formed by TRID, with more than 80% of participants in a National Association of REALTORS® survey reporting that they had already received a level of training on the subject. If you have questions about TRID, contact your local REALTOR®.