Helpful New Mortgage Documents

March 17Helpful New Mortgage Documents

First time home buyers are often sent into a state of shock when they begin to see the number of different costs that accrue in the “simple” act of buying a home, whether it be a single residence or a luxury condo in the Jersey City/Hoboken area. In some areas, it is customary for the seller to pay a certain amount of these costs, and the buyer to pay others.

 

Lenders have devised various methods for collecting these costs. Sometimes the buyer pays them altogether on the day they close the mortgage deal (hence, the term “closing costs.”). Sometimes they are included in the loan itself, or the lender can pay them in exchange for a slightly higher interest rate. Yes, that means the buyer is actually paying, only over a period of time, instead of in a lump sum.

 

In August of 2015, the Consumer Financial Protection Bureau (CFPB) introduced two new documents in an attempt to help the consumer to understand the process of closing a loan better, and to give them an up front idea of just what costs they may have to pay.

 

When the process of applying for a mortgage first begins, the lender is required to issue to the buyer a document called a Loan Estimate form. This is a general view of what costs may occur in addition to the amount of the loan. It is handy, for comparison’s sake, if you are applying at more than one bank.

 

The other document required by the CFPB is to be issued at least three business days before the closing of the loan. Called the Closing Disclosure, it is a finalized statement of the total cost for closing the loan. This gives the consumer time to prepare, and to make a well-informed decision about whether to make the final commitment to the loan.

 

These documents are actually a refinement and revision of the “Good Faith Estimate” and the “HUD-1” Settlement Statement formerly issued by lenders. The new forms have received mixed reviews by lenders. The CFPB has done research, however, which indicated that after using these documents in the acquisition of a loan, consumers’ understanding of the process improved about 29 percent. The Home Buying Institute has given the forms favorable marks. Here is a link to their story on the documents.

 

Knowledge, as they say, is power. The more you know about the process of obtaining a mortgage loan, the better equipped you are to negotiate for the best deal possible. Your real estate agent can steer you to the facts you need, and the preparations you need to take before applying for a loan.

 

Where will your new home be?

 

Edward

 

 

About Edward Perez

Named 100 Most Influential Real Estate Agents in New Jersey 2016, Edward's career spans 16 years and he is sought out for his innovative real estate marketing, media savvy & brokering of premium properties in the Hoboken, Jersey City & Northern New Jersey market place. He is an avid real estate investors, rehabber and team leader & founder of the NJ Luxury Group specializing in helping clients buy, sell, lease and invest.

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