How Will The New Mortgage Rules Affect You?

The mortgage game might be the same, but the rules have changed to favor home buyers instead of lenders. The Consumer Financial Protection Bureau (CFPB) is pinch-hitting for HUD. Its mission: to make sure the housing crisis of 2008, never happens again. One goal is to make the buying process clearer to consumers, whether you're looking at homes for sale in Taos, NM or Angel Fire, NM

Starting October 3, when you apply for a new mortgage, you'll receive new disclosures that will make the loan process easier, help you save money, and ensures you know before you owe," This new mortgage process is more transparent to consumers and includes information that helps you, the home buyers, figure out what you can afford to buy. This new rule is called "Know Before You Owe".

Here's an overview of the changes and what they mean for you.

Some history

Before the new mortgage disclosures went into effect, homebuyers were presented with the TMI (too much information) version of mortgage documents. As you can imagine, it was a bit complicated. And lenders didn't even have to disclose everything. "The old Good Faith Estimate and the HUD-1 did not explain the two most important things to their consumers: like knowing what their new payment will be and how much cash will be required at closing,"

The change

The CFPB replaced the four documents with two simpler ones: the Loan Estimate and the Closing Disclosure. The new forms "help you shop for the best deals and avoid expensive surprises at closing," Home buyers now have "a better perspective of the true cost of their loan.

The three-day-wait rule

The new CFPB mortgage disclosure rules call for a three-day period to allow buyers to look over and become familiar with the Closing Disclosure before they get to the settlement table. The three-day period "gives you time to talk to your lender about questions you might have about the terms of your mortgage, as well as consult with your housing counselor or advisor," "Borrowers will know every tax, fee, risk, and if there are any penalties for paying off the loan early or whether there is payments at the end,"

The mulligan, or the do-over

If the loan product changes during the three-day review period, you must start over and take another three days to review the new changes.

Here is what triggers the additional three-day period:

1) If the annual percentage rate (APR) increases by more than ? of a percent for a fixed-rate loan and ¼ of a percent for an adjustable loan.

2) If a prepayment penalty is added.

3) If the basic loan changes, from a fixed rate to an adjustable one.

Minor changes such as a typo on a closing document the discovery of a bedroom window that won't open and wanting a credit from the buyer -- won't trigger the extra three-day wait. But even still, "Problems could arise with the three-day disclosure period, creating a domino effect," If a closing is delayed by the buyer, it will directly impact the closing of the house the seller is trying to buy."

The new normal: a 45-day closing?

A typical closing takes 30 days, but many lenders now assume they'll need more time to close. A consumer in a hurry is not going to have an easy time of it," Most of the waiting periods are mandatory and can not be waived. This three-day rule, although well-intentioned, could cause you to lose out. If you're in a hot market and it takes 45 days to close, a cash buyer who's ready to close might be a lot more attractive, leaving you to start over. But once the dust settles, the closing time frame should adjust.

Here are to tips to help you get through the closing period!

1) Ask for a rate lock longer than 30 days.

2) Avoid any loan that does not waive the per diem charge for late closings.

Here at New Mexico Mountain Properties we understand the stresses that go with being a homeowner and we are dedicated to helping you sell your home or acquire a new home. So whatever you fancy we've got you covered....a home in Taos.....or maybe a Taos Ski Valley condo is what you are looking for. We also have fabulous deals on Taos land for sale as well as small to large parcels of land for sale in Angel Fire. Looking for a home or condo in Angel Fire? We can assist you with that as well. Give us a call at 575-377-2626, in our Angel Fire office or 575-758-5852 , in our Taos office or speak directly to the broker at 575-770-3306. We are dedicated to going that extra mile to make sure you get exactly what your looking for! Let us serve and welcome you to the Enchanted