The New Rules that Could Impact Your Home Purchase
New requirements from the Consumer Finance Protection Bureau go into effect August 1, 2015. The new rules are set to help buyers understand exactly what they are paying for in a more concise Loan Estimate form (LE) and how to seal the deal with the new Closing Disclosure. However, the new rules also affect closing procedure; meaning that 30-day transaction could now take 45, even 60 days or more!
(To see examples of what the new forms will look like, click on these links:
In real estate, timing is everything. From the moment an offer is made and agreed upon, the closing clock begins ticking. Appraisals of the property need to be conducted, along with inspections, surveys, title searches and much more before that day comes to close on the home. Normally, the Good Faith Estimate (GFE), HUD-1 form, and Truth-In-Lending Act disclosure (which will all be defunct come August 1) would be given to the buyer no earlier than a day before or the day of closing.
With these new changes, buyers will now be required to receive the Closing Disclosure at least 3 business days before the closing date. That is meant to educate the buyer who may have questions or need to make changes before the Closing Date.
However, that bumps deadlines for everyone earlier: including the lenders who approve the loans, to the title company that drafts the final paperwork!
And guess what? If the buyer or lending institution needs to make any changes, that 3-business-day clock must be reset. Those delays could put the contract in jeopardy!
The National Association of REALTORS® is recommending those final closing estimates be sent even earlier if they need to be mailed or e-mailed: up to 7 days before the closing, so changes can take place without moving the closing date.
To save the sale from falling apart, a smart REALTOR® knows this means extending closing dates to 45 or 60 days from the time the parties agree on a contract.
WHAT THIS MEANS FOR YOU
For Sellers: Decide to List!
1. Get Your Home on the Market Now!
According to the Greater El Paso Association of REALTORS®, more homes (601) sold in June than any other month in 2014.
Putting your home up for sale before June will increase your chances of snagging a buyer who needs to move quickly.
Plus, given the new rules, your sale won’t drag out an extra 15 to 30 days if your buyer applies for the loan before August 1.
Contact me at firstname.lastname@example.org to learn more about my extensive marketing strategy to make sure buyers know about your home!
2. Stick To the Contract!
It happens more often than you think. For instance, you (the seller) may have originally included the washer and dryer in the sale of the home, but then take them with you when you move out. This is a HUGE no-no! This could impact the settlement statement. Any changes made to the paperwork could push the deal past the closing date!
For Buyers: You Can Help!
1. Get pre-approved right away!
Before you even begin your home search, you should know exactly how much a bank would back you! Knowing your maximum loan amount means saving time during the contract process.
Additionally, several sellers in town won’t accept any offers without a pre-qualification letter from a lender. They want to know you are a serious buyer. And serious buyers make sure they have the financing they need.
Also, your offer may stand out above the rest!
Who would a seller most likely accept an offer from: a person who is pre-qualified and has the support of their bank? Or a person who is not sure how much financing they qualify for? Clearly the former!
If you plan to buy a home this summer, go talk to your lender/loan officer, send them the necessary documents, and get the bank/mortgage company to pre-approve you.