Since the release of new lending laws, commonly called TRID, on October 3, 2015, there is no more GFE (Good Faith Estimate) or TIL (Truth in Lending). Both of those forms have been replaced by the Loan Estimate (LE). But, you cannot get a LE without first having the address of the property you want to buy. So how do you shop for a home loan at the pre-approval stage?
Here is a quick and easy summary of the three steps I recommend.
1) Call three lenders and ask for an Estimate Worksheet.
This is the new upfront GFE. Depending on the lender, they might call it an Initial Fees Worksheet, Fees Worksheet, or simply use an Excel spreadsheet. Either way, this form shows the interest rate, monthly payment, and fees so you can see the cost of the loan.
2) Speak with the loan officer, compare pricing, and choose your lender.
Notice that I did not say email the loan officer and make your choice. Don’t be lazy! This decision is too important for you to hide behind your screen. Pick up the phone and have a real conversation with the loan officer, because you need to get a sense of whether or not this person is honest, communicates well with you, will provide good service and updates throughout the loan process, and so on. You cannot get all that in an email.
3) Proceed with your pre-approval.
Now is the time to submit your income and asset documentation, photo ID, as well as other paperwork so you can get a good, solid pre-approval letter on company letterhead. You will need this in order to present an offer on a property. Give your pre-approval letter to your real estate agent.
That’s it! Now you are ready to meet with your Realtor and shop for homes.
With a closing date in place and the PSA in hand, your loan officer will proceed with processing your loan. He or she will send you Loan Disclosures that include the Loan Estimate as well as other information required by TRID law. You will sign to acknowledge receipt and work with your loan officer through to closing.
If you happen to be buying a home in California or Washington, I would love to be your loan officer and mortgage advocate. I work for Envoy Mortgage, a full service mortgage lender. (We have our own money to lend as well as work with the wholesale division of other lenders such as Chase, Wells Fargo, Caliber, and others to get you the best deal.) My NMLS # 1284134. Envoy is a Fair Housing and Equal Opportunity Lender.
Three Advantages of Buying a Home in December
- Less competition means you are more likely to get a better price and less likely to lose out in a bidding war.
- Seller knows you are serious, because the looky-loos stay away when they’re otherwise occupied with shopping, decorating, and baking.
- Interest rates usually remain flat. As of today, the Feds have not issued the rate increase they have been speaking of.
You Don’t Have to Move During the Holidays
Just because you execute a Purchase & Sale Agreement now, it doesn’t mean you have to move during Christmas week. You can set your closing for January after your busy schedule has calmed down.
How Long Does It Take to Close a Loan Now?
As a Senior Loan Officer, I am closing loans in 30 days; but not all lenders are as fast. Many are asking for 45 days with the new TRID laws that require an extra three-day waiting period between providing the Closing Document for your review and your actual loan signing. Speak with your loan officer about how fast they are closing loans nowadays. If his or her answer sounds shaky or if they want longer than 45 days, it likely means they are having issues processing and I would seek another lender. If you want my recommendation for a loan officer who can close in 30 to 45 days, please see the state list below and then send me an email with the details via my Ask Carolyn Warren page.
States for which I can recommend a loan officer:
AL, AR, AZ, CA, CO, CT, DC, DE, FL, GA, ID, IL, IN, KS, KY, LA, MA, MD, ME, MN, MO, MS, MT, NC, NS, NH, NJ, NM, NY, OH, OK, OR, PA, RI, SC, TN, TX, VA, WA, WI, WY.
Required Legal Disclosure:
I work for Envoy Mortgage, a full service mortgage company. NMLS # 1284134
State licensed in CA and WA
Heads Up! A new lending law coming in October is going to stop you from closing your loan fast as you might like. Currently, some lenders (not the big banks) are closing purchase loans in three weeks. At my office, we closed a loan in 14 business days, because the seller’s circumstances demanded a rush.
But the Consumer Finance Protection Bureau (CFPB), the watchdog committee set up by the White House, has decided that folks getting a mortgage need more time to think about their financing. Even though, per current law, borrowers must have received the Good Faith Estimate, Truth-in-Lending, Lock Confirmation, Notice of Settlement Service Providers, and other documents that come to approximately 100 pages of disclosures at least three days after making an application… and even though they have several weeks while the loan is processing to discuss their financing with their loan officer… and even though they have the legal right to review the Settlement Statement for 24 hours before signing… even though… the CFPB has determined that is not enough time for people to think about their financing.
A new 3-day delay period in which borrowers can think some more about their financing is being instated with the new law called TRID (which, interestingly, is DIRT backwards).
That is a mouthful, and it is so convoluted that banks and lenders have had their attorneys trying to decipher it for the past year. To help explain it to regular folks, the CFPB has written a shorter “plain language” version that is ONLY 91 pages. You can download it here.
If you don’t feel like reading it all, just know that the days of quick and easy loan closings are fast coming to an end. Most closing agents, escrow and title companies, attorneys, and lenders are suggesting that if you’re buying a home after TRID comes in October, you allow 45 days to close (60 days if your financing is with a big bank).
The public has a right to comment on this upcoming law until July 7, so act fast!
Real estate agents, this is your opportunity to make your voice heard!
Here is the link.