Have you heard of TRID? It's a significant change for the real estate industry that just came about on Oct 3rd.
Here are the most important things for you to
know about TRID:
1. There are two forms that you hear about the
most during the home buying process: the Good Faith Estimate (GFE) and the
HUD-1 Settlement Statement. The Good Faith Estimate from your lender details
all the numbers that go with your loan. HUD-1 is essentially the reconciling of
the money back and forth between the buyer and seller. Both of these forms are
being revised and renamed. The Good Faith Estimate will be replaced by the Loan
Estimate form, and the HUD-1 will be replaced by a Closing Disclosure. Although
the names are different and the layout is somewhat different, the functionality
of these documents remains relatively the same.
2. In
order to protect the consumer, Congress wanted to make sure that the buyer has
enough time to review any changes with the numbers in the loan before settling.
In concept this is great, but it can cause unwanted, costly delays in
settlement. For example, you are a couple days away from settlement and a home
inspection repair was not made. The
buyer and the seller agree to a credit at settlement in lieu of making the
repairs. The buyer decides to use this
money from the seller to buy down the interest rate with discount points, which
ends up increasing the loan APR (Annual Percentage Rate). The lender is
required to issue a new loan estimate, and in doing so, triggers a waiting
period for the buyer to review the new numbers.
Presumably, this could be a scenario in which both the buyer and seller
agree on the credit and yet it triggers a delay in settlement which neither the
buyer nor seller want or need. This
could be a situation where the new government rules create a significant
problem for the buyer and seller.
In the past, buyers and sellers could negotiate
these issues and still close on time. With the home buying process, there's an
entire chain of events: shutting off utilities, setting up moving trucks, and
more. The waiting period could seriously disrupt the chain of events by
delaying moving dates or inspections on the seller's new property, and by
causing other scheduling conflicts.
3.
Another important item under the new TRID changes is that in some jurisdictions,
the contract language has been changed. For example, let's look at the
financing contingency. It used to be that when a buyer had an approved loan and
removed the financing contingency, they had to go to settlement. If they didn't
close on the loan, they could be in default and loose their earnest money
deposit. The contract language has been changed to protect the buyer, which
could be bad news for the seller. If a delay in settlement is caused by the
lender dealing with these new regulatory compliance issues, then the buyer may
not be in default. Again, this could cause a delay in the closing date. The
seller may have no recourse compelling the buyer close on the scheduled
contract settlement date.
4. With
these changes, most lenders say it will take at least 45 to 60 days to close a
loan. A quick closing in 21 days can often distinguish a buyer in a competitive
multiple offer situation. Most lenders
have no capability of helping their buyer in this situation, so knowing which
lenders can close quickly is crucial. A good lender could mean the difference
between getting a great deal on your home saving tens of thousands of dollars,
or loosing the home of your dreams because of a bad lender.
5.
Finally, the most important thing that a buyer can do to avoid problems
with the new TRID regulations is to select the right lender and get your loan
fully approved prior to searching for homes. Under the new TRID regulations,
smart buyers will submit all of your loan documents - the application, pay stubs,
last two bank statements, and last two tax returns - and making sure that the
underwriter has fully approved the credit portion of the loan prior to starting
to visit homes and make offers. Again, doing so will ensure that you avoid any
costly problems and loose the home of your dreams right before settlement.
As you can see, the TRID changes will
significantly impact home buyers and sellers. Now more than ever, selecting
your real estate agent and lender is crucial to ensure a smooth buying or selling
process.
If you have any questions, please give me a call/text me at 719-229-5770 or send an email to me at: realtorjuanita@gmail.com
Looking forward to helping you!
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