New mortgage rules has taken effect starting this month providing home buyers two new forms from their lenders detailing their loan terms.
According to money.cnn.com, David Stevens, CEO of the Mortgage Bankers Association, said "For consumers, it's going to be viewed as an improvement in what can be a somewhat scary and intimidating process in the biggest investment of their life."
The new rules are called Loan Estimate and Closing Disclosure and only requires two forms compared to four forms needed by the previous mortgage regulations.
With the new regulations, lenders are required to give buyers a loan estimate within three days of the buyer's application. The loan estimate includes interest rate, the amount, and conditions whether the figures of the loan will change or not after the closing.
Also, lenders should provide the closing disclosure from before the closing date to make sure that the buyer is agreeing to will not change.
John Henson, chief compliance officer at Lending Tree, also said "Make sure that first table [on the forms] match. You are stuck with that for the rest of your life. Make sure you can afford what you sign up for. If any amounts have changed significantly, be sure to ask why."
According to cnbc.com, the new mortgage rules is simpler and will give opportunity for the buyers to understand the mortgage terms easily and faster. The new set of regulations is simply called as "Know Before You Owe" since lenders will already provide estimates of the desired loan as well as its conditions' changes, if there's any. This will also give an opportunity for the menders to clarify everything with their lenders when something in their agreement has changed.
Jason van den Brand, CEO of Lenda, an online mortgage refinance company operating in Washington, Oregon and California, said "I think that's a big one because consumers have been complaining about this left and right because they would get to the signing table and suddenly everything would change. So you get quoted something and the loan gets locked, and you get to the closing table and suddenly the rate has gone up by a quarter percent, your fees have gone up $10,000 and you're sitting there scratching your head going, what just happened?"
The new rules aim to prevent this kind of confusion with the hope of making the lending process easier and more convenient both fir the lender and the buyer.
What can you say about the new mortgage rules? Sound it in the comments!