Lenders have their own fair share of closing documents and disclosures that borrowers must review, sign and return. VA loans also have a few extra documents compared to conventional loan applications. But arguably the two most important are the Good Faith Estimate and the Final Settlement Statement. The Good Faith Estimate provides borrowers with a list of closing costs borrowers can expect at the closing table. In some instances, if the numbers are different at the closing than what was originally disclosed, the lender might have to eat the erroneous charge. The Settlement Statement outlines the final closing numbers and includes the closing costs, amount borrowed and other debits and credits. That’s all about to change.
Beginning on August 1 of this year, there will be a new document labeled “TRID” which stands for the Truth-in-Lending and RESPA Integrated Disclosure form. Leave it up to the bureaucrats to come up with such an acronym. Anyway, it’s essentially combining two existing disclosures into one. But the kicker? It has to be provided to the borrowers at least three days in advance of the scheduled closing. No big deal? Lenders routinely provide borrowers with an advance peek of the settlement statement to look for errors and to know how much to bring to the closing. If there are any mistakes, such as the amount being corrected or a closing cost that is wrong, the lender makes the corrections and sends another statement. On August 1, that goes away.
No more last minute adjustments to loan amounts or waiving a fee or any material change to the loan without another three day waiting period which can cause dominos to fall on other closings. If buyers have to sell their current home in order to buy another one, if the loan documents are wrong in any form, the lender can’t just make the correction and move on—another three days must pass, causing a delay in the subsequent closing. Which could also affect the next. And the next. If you’re closing in August or shortly thereafter, be forewarned. No mistakes and be flexible.