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Chrisman's Corner: Borrowing Money to Purchase a Home Will be Just Fine

There has been a lot of commotion in the press about some changes taking places in about three weeks. JMAC’s brokers are aware of the changes, and they are being asked by their borrowers about it. How will the new TILA-RESPA Integrated Disclosures (TRID) affect buyers and sellers in the real estate market this year and into the future?

Some industry professionals believe the upcoming changes are positive despite a slowing of transactions over the next six months or so. Buyers and sellers will have to familiarize themselves with the new forms that will be transitioned from the Good Faith Estimate, Truth in Lending disclosure and HUD-1 Settlement Statement to the Loan Estimate and Closing Disclosures.

The CFPB reports that the new disclosures are easier to understand as they tested the new forms in a study and found that participants provided more correct answers about a sample mortgage using the new forms than the current forms. Fundamental language will also change on the forms, such as substituting “closing” for “consummation.”

In addition, a new feature of the loan estimate will include a five-year summary of how much the buyer has paid. For example, for an $180,000 house, $56,582 was paid over five years for principal, interest, mortgage insurance and loan costs. Of that, $15,773 went toward principal.

On the other hand, many real estate professionals find the new forms detrimental to businesses and are nervous for the new change, especially since there has been limited time for the industry to test the new forms prior to the effective date. The CFPB created these forms with the consumer in mind and to prevent another housing crash, but the change may result in delayed closings and create more paperwork for the consumer to review.

In the end, there are both positives and negatives to the upcoming TRID forms and despite pushback from the industry the integrated disclosures will become effective on October 3rd. And JMAC will be there to help our clients.