There are 2 pretty major changes happening October 3rd that will have an effect on a majority buyers and sellers. This change was supposed to happen August 1st but got delayed a couple months to allow agents, lenders and title companies to better prepare – and it’s now almost upon us.
If the Realtors, lender and/or the title company working on your sale or purchase are not on the ball, you can experience delays in closing, sometimes within a day or two of your closing date. In fact, the National Association of Realtors is recommending that closing dates for buyers getting financing be set for 45 days minimum from the date of contract rather than 30 days once this change happens.
2 Major Changes
Up to now, when you were making a purchase and getting financing you would get a Good Faith Estimate form from your lender going over the various costs of financing as well as other estimated closing costs. You would also get a Truth-in-Lending form that goes over all the costs of financing and a HUD-1 settlement statement at closing that breaks down all the closing costs for both the seller and buyer. Those forms are all being replaced as of October 3rd with the Loan Estimate form (which you will be sent within 3 days of submitting an application for financing to a lender) and the Closing Disclosure form (which you will have to get at least 3 days prior to the closing).
This is effective for anyone submitting an application for financing on or after October 3, 2015 for a purchase. If you submit your application for financing prior to October 3, 2015 then the lender and the company doing the closing can use the current forms and are not required to use the new forms.
If you have been thinking about selling or buying it would be a good idea to get your property listed or to actively find a property to buy during the month of September so that you can avoid these changes if at all possible. However, if that isn’t possible for you, then you need to be prepared for the changes and know what you can do to avoid potential issues that you may not want to experience.
Avoiding Issues As a Seller
Work with a Realtor who has prepared for the changes and who works with a title company that is also really ready. Your Realtor will also need to know how to qualify any potential buyers’ lenders to ensure that they are up to speed and can process the buyer’s loan quickly under the new rules.
Don’t put yourself at risk for a lengthy time to close or, even worse, having your closing delayed at the last minute by as much as 3 days. A last minute delay for a closing is a possibility under these new rules and is something you want to avoid at all costs. A last minute change in the closing date isn’t something you don’t want to have happen – especially if you have a move or purchase which depends on the close of the sale of your current property.
Avoid Issues As a Buyer
Be prepared for a possible 45 day period from the contract to the closing at the point you are determining when you should start seriously looking for something to buy, and plan accordingly.
If you are getting financing, ONLY use loan officers or mortgage brokers with a proven track record of getting the processing done quickly and who are fully prepared for the changes. Even before these changes have occurred there are some loan officers and mortgage brokers who have not been very good at getting things done in a timely manner and that will likely only worsen after October 3rd. Having the right person handle your financing is now even more crucial and you will need to be even pickier than before to avoid frustration with a financed purchase.