Does your new home purchase come with a mortgage? BEWARE of these changes!

November 18, 2015
Jutta V. Lopez

On October 3, 2015, the rules changed for buyers who need a mortgage to purchase a home. Both buyers and sellers may be impacted by these rule changes because if there is a delay due to the loan documents, the closing and any subsequent closings will be postponed The Consumer Financial Protection Bureau (CFPB) has implemented new rules related to real estate closings when there is a mortgage involved. These drastic changes can affect the timing of the loan process and required disclosures, and the closing.

What to Know if You Are a Buyer
If you are buying real estate with a mortgage, it will take longer to close the deal. The contracts have been changed to allow up to 45 days for a loan commitment. It will be most important to get your lender all the required documentation very quickly so there will not be delays. It is crucial that you are working with a lender who is knowledgeable in all of the complexity of the new laws.

What to Know if You Are a Seller
If cash was king before, it is now emperor. If your buyer has a mortgage, your sale may be subject to delays because of the required notifications and waiting periods involved. You will not be able to schedule simultaneous “back to back” closings on the purchase of your next residence.

The desire to have a back to back same day sell/buy closings maybe over owing to do with the “Truth-in-Lending RESPA (Real Estate Settlement Procedures Act) Integrated Disclosure” or better known as TRID rule. this has taken the three previously required mortgage loan disclosure documents and consolidated them into the following two forms: a Loan Estimate (LE) that must be delivered or placed in the mail no later than the third business day after receiving the borrower’s application, and a Closing Disclosure (CD) that must be provided to the borrower at least three business days before the loan completion or closing.

Once a buyer has chosen a lender and has advised that lender to start processing the application, he or she should gather and submit all of the lender’s necessary documents such as tax returns and pay stubs as early as possible in the process. The lender will start charging buyers fees for processing the loan once the buyer has advised the lender to proceed. There are, however, some last minute changes to the loan product that would require a new 3-day review period the closing would be delayed. These last minute changes include a fixed-rate mortgage changing to an adjustable-rate mortgage, the annual percentage rate (APR) changing by more than 1/8% or if a prepayment penalty is added. As noted above the Closing Disclosure for the buyer will be prepared by the lender. Closing agents will continue to prepare the seller’s Closing Disclosure and submit it to the lender for review.

When buying a home with a mortgage, things have definitely changed! Please take the time to do your research and find the right lender who can provide you with complete and accurate information in regards to all of these recent changes. Please feel free to contact me directly with any questions.

*Credits to NABOR and Boca Expert Realty*


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Naples, Florida 34103
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