The New Lending Process

A new set of lending rules have been put into place by the Consumer Financial Protection Bureau as of October 2015. The feds are trying to make it as clear as possible for the general public to read and understand what they are getting, and getting into, when taking out a loan to buy a house or other real estate.

There are now two main things for consumers to read and understand; 1) what the loan conditions are and 2) what it's going to cost you to borrow the money. These are called the Loan Estimate and the Closing Disclosure. These two documents replace the four documents consumers used to have to read and decipher - often having repetitive information that made you wonder if you had read it correctly or if you might be misunderstanding the whole thing. The "loan estimate" gives the consumer a better tool for comparison shopping - and that is an important thing to do before signing on the dotted line. This has to be given to the borrow within three days of receiving their application.

Other tools available are online here. Like the "Know Before You Owe" toolkit as well as the loan estimator and closing disclosure tools.

I always advise buyers to be prequalified for their loan before they step one foot in a potential house to buy. There is nothing worse than thinking you can afford "X" and finding out you really can only afford "X-$50,000."

The new mortgage rules should make things easier - though maybe not at first for lenders getting used to the new rules. Just as consumers are well informed on real estate, so too they should be well informed on lending.