If you are currently shopping for a house, be aware that it is probably about to take a little longer to get your loan done.
The reason it is going to take a little longer is because there is a new law going into effect on July 30th that changes the disclosure requirements and the way that your loan officer sends/discloses to you the Truth in Lending disclosure.
The Truth in Lending disclosure (sometimes called the “TIL” by people who are in the mortgage business) is a very important disclosure because it basically tells the consumer all of the “important” numbers about their mortgage. APR, Loan Amount, Interest Rate, Whether or not the loan is assumable, Late fees for payments and probably about 10 more important things as well.
As a result of the new Truth in Lending Disclosure law, I am expecting it to take longer to get your loan done — possibly about 30-50% longer. Which means that if your loan officer used to be able to get a loan done in about 20 days, expect it to take maybe 30 now. If it was 30, expect it to take maybe 45.
Why the increased length of time? Because of the number of times the consumer must be sent a disclosure when something changes — even slightly — and then an associated “waiting period”.
Highlights of the new Truth-In-Lending law:
- No upfront fees can be charged to the customer, except for a credit report charge until they have received the TIL. ( No more up front fees for those lenders who still charged an up front “commitment fee” or anything like it)
- TIL must be disclosed to the buyer within 3 days of application.
- Once they receive the TIL, then there is an additional 7 day waiting period before the loan can close.
- Any changes to the loan that result in a change to the APR, you will need to get a new TIL disclosure and then there is another 7 day waiting period.
Generally speaking, it is not uncommon for various numbers in a transaction to change slightly during the process, and so when this happens starting in August, just be ready for an increased turn time to get your loan done.
Now, it is not every loan that will take longer to get done – but on average, I think it is safe to say that the overall turn times to get a loan done are about to go up.
So my best advice is to write a 45 day close of escrow, starting August 1, not a 30.
Arizona Mortgage Rates July 24, 2009
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