Disclosure rules affect homebuyers
New rules aim to make sure buyers at least have a better understanding of the financial obligations they are signing up for when they take on a home loan.
“Know Before You Owe” rules, which took effect Oct. 3, require lenders to provide borrowers with clearly laid out details on their loan and what it will cost them in an initial estimate and, closer to closing, a final summary. Borrowers will have a minimum of three business days to review their final loan terms and fees before the transaction closes.
“It’s going to be easier to compare loan offers, and when you close it’s going to be easier to check to see if you’re getting the loan that you were promised,” said Holden Lewis, a mortgage analyst at Bankrate.com.
The rules, put in place by the Consumer Financial Protection Bureau, open the door to potential delays should factors such as a borrower’s credit score change near the closing date, forcing lenders to restart the loan disclosure process.