This regularly-scheduled sponsored Q&A column is written by Will Wiard, Arlington-based real estate broker, voted one of Washington’s Best Realtors of 2015 by Washingtonian. Please submit your questions via email.
Q: I’m in the process of applying for a loan and heard there will be changes coming to the process in the next few weeks. What is the TRID and how will it impact me as a buyer?
A: TRID, known as the TILA-RESPA Integrated Disclosure (TRID) Rule or Integrated Mortgage Disclosure Rule, goes into effect Oct. 1, 2015, and will apply to all new loan applications. This new rule will benefit the buyer when closing by allowing them more time to review their closing documents and make sure everything is correct and up to date. If you currently have a closing date on a home, the new rule will not change anything for your transaction. However, if you are just starting the buying process the new rule will apply to you.
So, how will the new rules change the process for buyers just entering the market? Under TRID, a home purchase will no longer include the HUD form — it will now be called Closing Disclosures (CD), which is a completely different format and clearly lays out all the fees and loan information. The new rule also gives the buyer at least three days to review the closing documents prior to closing, compared to the current one day or, in some cases, just a few hours before closing.
Additionally, the lender will now be responsible for drafting and delivering the CD rather than the title company. By taking on this responsibility, the lender may be held liable for not delivering documents on time or issuing incorrect fees. This part of the new rule is a major change to the process for real estate professionals and will directly affect the lending and settlement process. As some roles are shifted from the title company to the lender there may be some growing pains.
Given the new guidelines, here are a few tips for buyers:
Lock your interest rate.
Make sure you are locked into your interest rate for a longer period of time, if at all possible. Because of the new rules, closings could be delayed at least initially, so make sure to speak with your lender about the best way to protect yourself from delays with a locked rate.
Build in more time for back-to-back closings.
If you are planning to sell a home and purchase a new one successively, keep in mind things may take longer on both sides. Work in a few extra days on both ends to be sure you have enough time to iron out any situations that may arise.
Consider the 3-day rule.
With the new rule, processing any changes to the following will require additional days to close:
- Changing the loan amount
- Any special credits paid outside of closing
- Changes to the property type
In short, while the new rule may help buyers better understand the loan documents, shifting the loan paperwork to the lender is a major change in the process, which means it could take longer to close.
Thank you for this week’s question. Please keep them coming to [email protected]. This is also a great place to reach me for anyone looking to buy or sell a home in the Arlington area.
The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.