Real Estate Closing Process to Change

Whether you’re selling or buying a home, the real estate closing process can be a complex, confusing experience. With so many forms to fill out and sign, there’s always a little worry that you may be signing away more than you intended, simply because you don’t understand the process or your options. The real estate bubble fiasco of a few years ago demonstrated just how confusing real estate closings can be to most consumers who wound up being lured in by terms that sounded great, but wound up not being in their best interests in the long term.
Fortunately, all that is about to change. On October 3rd new regulations came into play that help streamline and demystify the closing process by making closing forms easier to read and understand. The forms are part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which was developed to help protect consumers from making poor or uninformed financial decisions by revamping many of the country’s financial regulations. One of the primary targets of the act was to put an end to predatory lending practices that led to an unprecedented number of foreclosures in Florida and throughout the U.S. But the act takes other measures as well to help take the mystery out of the home buying process. Chief among those changes is a phasing out of the old Good Faith Estimate and Truth in Lending disclosures that traditionally been used in real estate transactions, and a phasing in of a new loan estimate form that’s much simpler to follow. The form replaces financial jargon with “plain” English so consumers have a better understanding of the information the form contains. It’s also shorter – three pages instead of five.
The second major change affects the HUD-1 sheet presented at settlement. That form has now been replaced by the closing disclosure which has also been designed to be easier to read. It also “maps” more easily to the loan estimate form, so buyers understand the fees they’re paying and how the settlement documents relate to the documents they received at the beginning of the closing process.
Finally, the changes also stipulate a three-day review period for the closing document, which means an end to last-minute changes that caused significant confusion. It also means the closing process might take a little longer, at least in the early months of the form’s use as lenders, title companies, attorneys and other parties become used to the new process.
If you’re planning on buying or selling a property this year, it’s important to know how these changes could affect your home purchase and closing schedule. At Palma Law Group, we help our Tampa Bay area clients understand the real estate transaction processes so they can avoid costly errors and delays. Give us a call today at 727-669-3909 to schedule a consultation.

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