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Understanding the new TILA Rules

As you look for a home to buy in Maine, you should be aware of some changes in the real estate world as of 2015. In particular, the TILA-RESPA Integrated Disclosure Rule went into effect in October, and it changes some of the paperwork that you will encounter when you buy a house. With the new rules expect some delays. The average closing with the new rule is approximately: 45 days. Fortunately, the change is positive for homebuyers, but it can be confusing. Here’s what you need to know about this new rule.

What Is the TILA-RESPA Integrated Disclosure Rule?

The Consumer Financial Protection Bureau is the group that put the new rule into effect, with the intention of consolidating four different disclosures that are required by TILA (Truth in Lending Act) and RESPA (Real Estate Settlement Procedures Act of 1974). Instead of four forms, there are now two, which should increase clarity for buyers looking at homes in Maine and the rest of the U.S.

One of the forms is a Loan Estimate, which is supposed to replace the Truth in Lending and Good Faith Estimate documents. The new Loan Estimate is comprised of three pages that go over the loan term, home sales price, total loan amount, and the type of loan. This document should also list additional expenses, such as HOA fees, property taxes, and insurance. Homebuyers need to receive this within three business days of submitting an application for a home loan. They then have to wait seven days before signing loan documents.

The other form is the Closing Disclosure. This is supposed to replace the HUD-1 and Truth in Lending disclosures. Its purpose is to make clear to homebuyers what the expenses and terms of the home buying process are. It needs to be given to the buyer three or more business days before the close of the loan.

How It Affects You

The reason for the new TILA-RESPA rule is to make the buying process easier on anyone looking to purchase a home, whether in South Maine or anywhere else. More specifically, consolidating four forms into two can simplify the process. After all, homebuyers already have to read and sign so much paperwork that it makes sense to reduce the amount of forms when possible.

Additionally, these new forms make an effort to ensure homebuyers in Maine and the rest of the country are aware of what to expect when they buy a house. It’s important to know the type of loan you have, the terms you are agreeing to, and then of course the amount that you will be paying over a period of 15 to 30 years. With the previous forms, these terms were not clear to many buyers, leaving them to have lots of questions at closing.

The new deadlines for providing buyers with these forms can make the closing process easier on not just buyers, but also brokers, title insurance staff, lenders, sellers, and real estate agents. This way, the forms will be filed in time for the closing date. And the fact that the disclosures are clearer than before means that real estate professionals don’t have to spend as much time answering questions, which can further speed up the process.

Whether you want to know more about what the TILA-RESPA regulations mean for you, or you’re interested in buying a house in Maine, contact us for help today.