Ready For A Quick Closing? Not So Fast.
As a small part of the Stimulus package, Congress passed the “Mortgage Disclosure Improvement Act.” This act, which took effect of July 30, attempted to ensure that buyers went into their closings with all the [correct] information. The main provisions of the Act are
- A borrower must receive a Good Faith Estimate [GFE] and a Truth in Lending [TIL] disclosure within three days of submitting a mortgage application. [This was already required, but is reinforced by the Act]
- The borrower must have at least seven days to review the GFE and TIL disclosures. This can not be waived by the buyer.
- If the terms of the loan change, or the loan APR increases by more than 0.125% [one-eighth of a percent], the buyer has to receive a new GFE and TIL disclosure. The buyer than receives three days to review the new documents. The buyer can not waive this period, so if the change is made the day before closing, the closing is delayed.
All of this is supposed to prevent buyers from arriving at the closing table to discover the terms and expenses of their mortgage are not what the buyers thought they were. That is a admirable goal. What it will also do, however, is slow down the application process. Think about it — under the new system, lenders are going to want to be absolutely certain of all the numbers 72 hours prior to closing. Otherwise, the closing ends up delayed and everyone is unhappy [and they blame it on the lender, which makes it doubly bad].
The mortgage pros I’ve spoken to have said that buyers should assume the application process under the new system will take 45 days, where it used to take around 30. If you are a first time home buyer trying to get closing done before the tax credit goes away [on November 30], that’s another 15 days you need to build into your schedule. Don’t wait until the last minute. Email me today, and we’ll get started finding that first home for you.
Tags: first-time buyers, mortgage news
