It used to be too common a story: You’re excited about signing the paperwork, shaking hands and grabbing the keys to your new home. But the day before closing, the lender advises that your closing fees are several hundred dollars more than their Good Faith Estimate listed. Suddenly, your excitement turns to pressure to just pay it and close the deal.
Those days are over, thanks to the Mortgage Disclosure Improvement Act.
What was once the Truth in Lending Act has been rewritten with new rules to help consumers understand the loan costs and alert borrowers to changes in fees well in advance of closing.
Now the lender must provide a Good Faith Estimate within three days of receiving the borrowers’ application, and closing can’t occur until the buyer has seven days to review the disclosure.
If the final APR (annual percentage rate) differs more than 0.125 percent from the original quote, a new disclosure must be provided, granting the borrower the right of rescission.
This relieves the pressure that buyers once felt to agree to pay higher fees and rates at the very last minute.
As always, borrowers can review the final documents one day before closing, providing an excellent opportunity to review all of the figures with your Realtor and to ask any lingering questions before you make it official.
— Elaine Abercrombie, a broker with Abercrombie Fine Homes, is president of the Santa Barbara Association of Realtors. She can be contacted at elaine@AFHomes.net.