Financing industry regulations go into effect today with regard to new home loans. Home buyers who are currently looking to purchase and those that are in the process need to be aware of these changes and how they will impact your transaction.
HVCC and HERA/HOEPA changes (don't stumble over the program names, just pay attention to the regulations!)
- There is a required waiting period for receipt of initial loan disclosures - borrowers must be informed as to what they are borrowing (loan disclosures are important documents worthy of review and complete understanding)
- Fees may not be collected until AFTER the loan disclosures are received by the borrower
- Many lenders will not start processing the loan until AFTER the FEES have been received (this will delay the process and thus the closing for an equal amount of time)
- Fees for the appraisal must be collected before it can be ordered - (borrowers must keep in mind to save back enough funds to pay for the appraisal up front.)
- Loans must have the interest rate locked at least 10 days prior to closing (locking a loan as soon as it looks good is not a bad idea.)
- Borrowers must receive a copy of the appraisal 7 days prior to closing. (this one puzzles me. If the appraisal is at value or more it doesn't matter. If the appraisal doesn't come in for the price the deal is most likely dead. Having it early only extends the closing out that much more, since it takes time to get appraisals done and we don't want to start the process until there is a strong confidence from inspections that we should move forward.)
After reading the rules must buyers will acknowledge the importance of starting the pre-approval process quickly. In today's fast moving real estate market where many buyers are competing with other buyers, it is now more important to the SELLER than ever that the buyer be as far along in the lending process as possible.
I can see a buyer losing out on the home of their dreams because another buyer was more prepared (pre-approved) when they weren't.
Being pre-approved means dealing from a position of strength.
As an informed consumer being pre-approved is the best thing you can do for yourself.
About the Photo: Located in the green-built community of Stapleton, this lovely red house surrounded by a colorful garden in the park is just one example of the charming homes to be found there. (The red house is not for sale, but there are others...)