This Saturday, October 3rd the real estate closing process will change for everyone across the country. The Consumer Financial Protection Bureau will be implementing new laws this weekend that will affect the way that buyers, sellers, agents, and title insurance providers proceed through the real estate closing process. The goal of the new regulations is to protect home buyers by educating them about closing costs and by streamlining the process.
To increase efficiency and reduce redundant paperwork, several forms will be revamped to be more simplistic and will be easier to locate key information. Some of the changes include combining The Good Faith Estimate and Truth in Lending disclosure into one document called the Loan Estimate. The new Closing Disclosure will be replacing the HUD-1 and final Truth in Lending document. However, the biggest change in the process will be the addition of the three day rule or “Know Before You Owe rule”.
The three day rule is simply a review period where no further changes can be made to the closing financials. Before, changes could be made in real-time, up to and including the final closing table. This was convenient for some parties, but often left the buyer in the dark about hidden charges that added up down the road. Now, anytime there is a major change in the financial agreement, it automatically triggers the three day review period to ensure that the buyer has adequate time to educate themselves about the terms.
There is no question that these new regulations will help to protect consumers during the buying process. The consolidation and simplification of paperwork and review period will help inform buyers leading to better choices and ultimately the development of a more well balanced market. With that being said, as a consequence of the new review period, some flexibility and convenience will be sacrificed.
The purpose of these changes is to protect consumers and help them make more informed and intelligent decisions. As a result, conveniences like early move-in or having a loading van ready to go, have probably gone by the wayside. – Rick Boswell, broker and owner, Century 21 Sterling Realty (full article)
Furthermore, buyers and sellers who are trying to complete a transaction quickly will find it more difficult. Hitting changing deadlines and dealing with last minute changes will be more of a challenge and require extra planning especially in the early phase of the law’s rollout.
In the first several months, lenders and title companies will follow these new rules very strictly. Over time, everyone will develop methods to solve last-minute problems…Real estate agents can help buyers and sellers avoid this problem by discussing the new settlement procedures at the time of the listing. – Louis M. Pope, broker and owner of Century 21 Trademark Realty (full article)
Home buyers should take the time to review these new changes thoroughly especially if you’re shopping for a new home presently. If you are currently writing or submitting an offer before October 3rd, you will be exempt from the changes, but check with your real estate agent first just to be sure. Overall these new regulations will benefit all parties by simplifying and streamlining documents and educating the buyer about closing costs through a mandatory review period.
If you’re wondering how much your home is worth visit our sister site: Charleston Listing for a free valuation based on current market conditions specific to Charleston, not a broad national average like Zillow or Trulia. Or contact me directly to discuss anything real estate; buying, selling or any questions you might have about the Charleston real estate market.
Search All Charleston Real Estate