My clients always know before they owe. Now, everyone gets protected!

Are you concerned about the new mortgage disclosure rule, Know Before You Owe? It requires that banks allow for a three-day review period, just before the closing, in which buyers can compare all of their actual closing costs with what they were quoted at the beginning of the loan application process. If the numbers don’t match up, the closing could be delayed.

Only three changes require a new three-day review that could hold up your closing. Aside from that potential inconvenience, the new law protects consumers, so I am all for it! These are the instances in which a change in loan terms will require a new three-day review before you can close.

  1. The APR (annual percentage rate) increases by more than 1/8 of a percent for regular loans (most fixed-rate loans) or 1/4 of a percent for irregular loans (most adjustable loans). A decrease in APR will not require a new three-day review if it is based on changes to the interest rate or other fees. Lenders have been required to provide a three-day review for these changes in APR since 2009.
  2. A prepayment penalty is added, making it expensive to refinance or sell.
  3. The basic loan product changes, such as a switch from fixed rate to adjustable interest rate or to a loan with interest-only payments.

The Consumer Protection Finance Bureau website has everything you need to know.

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