Closing on a home can be a confusing and flustering experience, especially for first-time home buyers. But new rules going into effect during the weekend aim to give buyers breathing room.
Starting Saturday, home buyers will have access to new standardized forms to replace ones that might have varied widely from lender to lender. The new forms are supposed to make it easier for people to understand their interest rate, what they owe and how much they need to pay up front.
Borrowers will also get at least three days to review the loan before they close on the mortgage. Currently, they can make changes even on closing day and still complete the sale.
The new rules were mandated by the Consumer Financial Protection Bureau to cut down on the issues that came up during the financial crisis, when many buyers lost their homes after signing up for complicated mortgages they didn't fully understand.
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Instead of getting as many as four disclosure forms when applying for and closing on a mortgage, consumers should now get two, simpler forms. One is the loan estimate, which should break out the total loan amount, the estimated monthly payment and the amount of cash needed to close. The second form is called the closing disclosure, which should be provided three days before closing.