If there is one thing that is certain in life (and real estate), it is change! On July 30 of this year, changes were implemented by the Federal Reserve that can significantly affect the timeline for mortgage loan closures. If you are in the market for a home, or are trying to complete a first-time homebuyer purchase and meet the program’s requirement of closing the transaction by November 30 of this year, you will want to ensure you factor in allowances in your timeline for the new regulations. 

These new regulations were designed to protect consumers from misrepresentations that might lead to higher interest rates or non-refundable fees, with an overall goal to increase the disclosure requirements. Specifically, the new rules require lenders to provide the following to prospective buyers during the escrow period:

1. A good faith estimate (GFE) outlining all costs associated with the mortgage loan within three business days of receiving the application.

2. With the exception of a reasonable fee for verification of an applicant’s credit report, Lenders may not charge any fees until the GFE is delivered to the applicant.

3. If the annual percentage rate (APR) specified in the GFE increases by more than one-eighth of a percentage point, a new GFE must be prepared at least three business days before the closing date. Some of the fees that might affect the APR include the following:

• pre-paid interest
• discount points
• interest rate
• rate extension fee
• loan amount
• title fees
• mortgage insurance premium
• VA funding fee

 4. A waiting period of seven business days after providing initial loan costs must pass before the loan can close.

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