You Can Always Count on Change
There are so many examples of how things have changed. If you were born in the 50’s you have seen so
many changes. If you are part of the Greatest Generation…WOW have you seen changes. Things that the
Millennials take for granted, Baby Boomers struggle to grasp. How many upgrades to my computer or
cell phone can I ignore before my system is totally obsolete or the computer gurus will refuse to work
on? The home I grew up in had two bedrooms and one bath, a small formal living and dining room and a
small eat in kitchen. There is no such thing as a typical home today. Anything from 2 bedrooms and one
bath; three bedrooms with 2 ½ baths; five bedrooms with 4 ½ baths. A great room or den, a media
room, a FROG (finished room over the garage which can be just an open space finished nicely with
carpet, or it can also have a large closet and a full bath of its own.) You can own the large yard that
surrounds your home, own no land because your property is defined as a condominium, townhome or
patio home. A carport, detached or attached garage which can be one, two, three or even four bays.
As you start to work with your REALTOR® and you want them to have a good understanding of what you
want in a home, defining it might not be as easy as you think. But work together and get started looking.
The best way to define what you want is to let your REALTOR® know what you don’t want. Things seem
to work out when we understand the picture you have in your mind of that perfect place to call home.
One big change that is occurring has nothing to do with style of home, how long it takes to find it, or
what the preferred color pallet is. It has to do with getting your financing lined up and the transactions
successfully closed and recorded. If you have bought a home before and you think you understand the
steps to this part of buying your home… Think again. As of August 1 ( this date may change in order to
allow lenders and lawyers to update the required software) of this year things are changing. If you are
familiar with the term HUD-1, it will now be called the Closing Disclosure Form. This form will contain
the final disclosure that was given to the borrower along with the HUD-1. The final rule has two options
pertaining to who prepares this form. The lender can prepare the form, or the lender and the settlement
agent can prepare it together. There will also be a 3 day rule…A WHAT? This new rule says that the
closing disclosure must be given to the borrower 3 days before closing. There might also be a 3 day
delay if certain changes have to be made, sending the documents back to the underwriter. Those
changes fall into the following categories;
- Changes to the APR (annual percentage rate) above 1/8 of a percent of the loan;
- Changing the loan product;
- Adding of a prepayment penalty to the loan.
Why all these changes? The reasons were established in the Truth and Lending Act and the Real Estate
Settlement Procedures Act; To improve consumer understanding of risk factors, overall costs and
monthly payments; To help the consumer realize that they should compare the different loan products
that are available to them and to avoid costly surprises at the closing table. These new rules apply to
most mortgages EXCEPT Home Equity lines of credit, Reverse Mortgages and Mortgages secured by a
mobile home.
As the consumer, you would be well advised to start the conversation early on with your real estate
team. Your REALTOR® will be educated on these changes as will the lender and the closing attorney.
The lender and the closing attorney are on the front lines of these changes. My personal advice to you if you
are purchasing a home after August 1st is to stay calm if faced with a delays. It is no one’s fault. We are
all facing a learning curve and we are doing our best to understand any impact these new rules will have
on our clients. Your REALTOR®, Lender and Attorney are working hard to best represent your needs.
Buying and selling real property, especially your primary residence, can be an emotional roller coaster
ride at times. Make sure that you are comfortable with the members of your team. Ask questions. And
remember that delays are normal. Prepare for plan B, if a short delay should occur. Your team members
can help you understand the delay and then help you to manage the situation.
By: Patrice Willetts