TRID (TILA-RESPA Integrated Disclosure) Is Finally Here!

November 5, 2015

The TILA-RESPA Integrated Disclosure Rule became effective on 10/3/2015 which mandates that consumers receive 2 forms during the loan process: The Loan Estimate and Closing Disclosure. The Loan Estimate provides disclosures which assists home buyers in understanding the features, closing costs, and risks associated with a mortgage loan and consumers must receive this estimate no later than 3 business days after submitting a loan application. See Loan Estimate example. The second form, the Closing Disclosure is similar to the Loan Estimate and includes a lot of the same information but this form shows the final closing costs and comparison of costs to Loan Estimate. In theory, the lender must give the most accurate loan estimate up front based on the best information available at the time. The Closing Disclosure must be provided at least 3 business days prior to closing. See Closing Disclosure example.

Previously, the disclosures known as GFE or Good Faith Estimate, TIL or Truth In Lending, and HUD 1 or Closing Statement were confusing and difficult to explain to the consumer. Now, the disclosures are easier to understand and you can find important information such as interest rate, loan payments, funds needed to close the loan. Also, these forms provide more detailed information which help buyers decide if they can afford to buy a home and compare costs among lenders. Finally, one of the biggest complaints in the past has been “TRANSPARENCY.” There were too many cases which buyers would get a good faith estimates of closing costs which were substantially different than the actual costs and funds required to close on the home. Also, more times than not buyers would receive their final figure on the amount needed to close within hours of closing so they would embark on a mad scramble to the bank to get a cashier’s check and rush to the closing table in a state of panic. Today, you can take a deep breath knowing you will get an accurate estimate closing costs and funds needed to close in a timely manner but there is one drawback: You can’t rush the process anymore so there is a trade-off for complete transparency but isn’t the wait worth it to become a homeowner? Hmmm…

The best way to get an idea of closing costs is to fill out the pre-approval request form before you shop for a home or contact one of our team members at 847-516-5743 and they will assist you with the questions you may have regarding the steps in the loan process and loan costs.