FirstOhio-blog12.3.15

The new TRID regulations for mortgage loans, also known as the Consumer Financial Protection Bureau’s “Know Before You Owe” initiative, took effect on October 3. It is too early to know for certain how TRID will affect the length of the closing process. But since the new regulations are officially in play, now is a good time to review what “Know Before You Owe” means to you as a borrower.

In a nutshell, “Know Before You Owe” was developed to simplify loan disclosure information, provide transparency and help borrowers better understand the mortgage lending process. The formal name of the program is “TILA-RESPA Integrated Disclosures” or TRID. Basically, TRID combines four federal disclosure forms that have been used for many years into two much simpler documents. The Initial Truth in Lending document, the Final Truth in Lending document, the Good Faith Estimate and HUD-1 have been superseded by the Loan Estimate and the Closing Disclosure.

You will receive a Loan Estimate from each potential lender within three days of providing them with basic information. The Loan Estimate will break out the Loan Terms, Projected Monthly Payments, and Estimated Closing Costs including loan costs and cash needed to close. The Loan Estimate also provides data that you can use to quickly compare one loan offer against another.

You will also receive a Closing Disclosure at least three days before your scheduled closing. This document essentially mirrors the information contained in the Loan Estimate but in final detail. It also includes a summary of both Borrower and Seller transactions. The Closing Disclosure gives you the opportunity to carefully check all the details and question anything that appears different. The three day window is your time to ask any and every question that comes to mind. Take advantage of this time to be certain that you understand all the information on the Closing Disclosure – prior to closing day.

How much will the new TRID regulations lengthen the closing process? As noted above, it’s still a bit early to know for certain. A reasonable estimate is 1-2 weeks, which extends the standard closing time frame from 30 days to approximately 45 days. We will get a better idea over the next few months as more residential real estate transactions go from start to finish with the TRID rules in effect.

Overall, there is nothing about TRID that should make you shy away from applying for a mortgage and buying a home. Remember that “Know Before You Owe” was created to help the homebuyer. When you gain a much better understanding of the mortgage lending process and can avoid any surprises at the closing table, a week or two added to the standard closing timeline is well worth it.

If you have more questions about TRID or would like information about obtaining a mortgage with First Ohio, feel free to contact us here. We look forward to hearing from you!