TRID Designed to Ease the Mortgage Process

Landmark legislation that overhauled the documentation that mortgage consumers receive throughout the finance process and at the closing table was implemented on October 3, 2015.

The TILA-RESPA Integrated Disclosure (TRID) rules were designed by the Consumer Financial Protection Bureau (CFPB) to make the mortgage process easier for consumers.

The last significant change to this documentation occurred in 2010, as real estate and mortgage industries were swimming in the wake of the real estate and economic meltdown that had started several years prior. Since then, the CFPB, as directed by Congress, has further revised mortgage-related documentation.

Homeowners who previously financed homes will likely notice the difference with TRID. Those who are doing it for the first time will hopefully find the documentation clear and easy to understand.

When you apply for a mortgage or shortly thereafter, you will now receive what is called the Loan Estimate, which replaces two previous documents. This will clearly list all costs -be it fees or other expenses-for you.

Another part of this implementation that has changed the process will take place at closing. Prior to this new set of regulations, closing documents were able to be prepared and finalized literally minutes before closing. Now all finalized documents need to be prepared at least three business days before closing. Whether it is a home purchase or a refinance, the borrower now has adequate time to review all the details with whomever they need to, be it their mortgage professional, attorney, etc.

This is likely a relief for many borrowers, who may have found this last stretch of the process stressful and confusing, and who may have felt there wasn’t sufficient time to read and understand the documents they were signing.

Now that they have the time to consider, the expectation is that the closing process will proceed more smoothly than it did in the past.

Buyer Beware: There Are Downsides to Buying a FSBO

Purchasing a property for sale by owner (FSBO) may make sense to many; because the seller doesn’t pay real estate agent commissions, the price should be lower. However, buyer beware. There are downsides to purchasing an FSBO. According to research conducted by the National Association of Realtors┬«, fewer than 10 percent of FSBOs are actually sold.

Why? There are any number of reasons, ranging from sellers not knowing how to price the property to potential problems with the condition of the house.

For example, without the advice of a real estate agent, the seller could overprice the home. So when your lender has the property appraised (which you will pay for), you may find that the appraisal comes in lower than the seller’s asking price. And because the lender is only prepared to lend against this appraisal value, not against the price the seller is asking, you may come up short.

A home inspection is always advisable, but with an FSBO, it’s essential. Even with an inspection, the seller may refuse to fix the items identified in the inspection and the deal may fall through.

In purchasing an FSBO, you will need your own real estate agent to represent your interests-even if you pay his or her commission yourself. Your buyer’s agent will evaluate the property in the light of current local market conditions, negotiate on your behalf, ensure that the transaction closes seamlessly, and more.

Your home is the purchase of a lifetime; if it’s an FSBO, make sure it’s done right.