Oct 3 2015 New Lender Timeframes May Delay Closing

Oct 3 2015 New Lender Timeframes May Delay Closing

That’s right, I said 30 days until Christmas. The reason being, according to the latest update from our [Realtor] associates, the new Truth-In-Lending (TILA) and the Real Estate Settlement Procedures Act (RESPA) rule begins on October 3, 2015 when the Consumer Finance Protection Bureau (CFPB) Integrated Disclosure Rule takes effect. If you’ve not made your application for a loan with your lender, by the “end of day” October 2nd, 2015, you may miss Christmas in your new home or even the homestead deadline, December 31st.

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What this means for Buyers:

Austenites have been spoiled with 30 day closings from ‘contract to close’. Waiting until the last minute to find the best deal on the market and still be in your new home for the holidays may be cutting it close. If you’re paying cash for your home, nothing changes, you can close as soon as the title work is complete; if you’re financing your home there are new time lines to follow which may be out of your Lender's ability to process your loan in the shorter time frame.

  • Lenders and title companies have a new set of rules to process your transaction; this means it may be possible to close in 40-45 days, but realistically you should prepare for 60 days, especially since there are 3 Federal Holidays coming up by year's end (Columbus Day, Thanksgiving and Christmas).

  • Buyers can possibly speed up the transaction. How? If you've not already made your loan application with your lender by Oct. 2nd, have your documents ready for your lender; providing basic income and asset documents at the time of loan application (W2’s, tax returns, bank statements, etc.)

  • When a lender, title representative or your Realtor asks for documentation, provide it in a timely fashion.

  • Know who you’ll use for insurance and have a binder sent over to the lender before they ask for it.

  • Ask your lender if they have a ‘pre-close’ checklist; this allows the lenders transaction closer or underwriter to verify all documents are in prior to the "3 day notification" period starts.

  • Have your Realtor set a realistic closing date. Adding an addendum to extend out the date means more paperwork to fill out, sign, and submit; this extra document could hold up your closing on your home by your intended date. If needing to extend the contract time in a tight market, the seller may not be inclined to sign the addendum leaving the seller the option to keep your earnest money and sell to another buyer.  There’s always a 60 day closing date can be moved forward with enough notice, but extending may not be an option for the lender, title or the seller.

What this means for Sellers:

Sellers and their listing agent will need to review a  pre-approval letter a little more closely as lenders may not be able to obtain income and asset information prior to filling out a full application which typically includes the address of the home they wish to purchase.

If the buyer’s pre-approval letter doesn’t have information as to if the buyer has completed an application, have your listing agent ask the buyer’s lender:

  • Is the pre-approval letter based on information provided on an application backed up by actual documents from the buyer?

  • Did the documents reviewed include the buyer's  tax returns?

  • Has the down payment funds been verified by the lender?

Knowing the answer to these questions will help you to make a better decision on accepting, countering, or denying an offer.

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Phone: 512-380-1823
Dated: October 1st 2015
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