On October 3, 2015, the Consumer Financial Protection Bureau (CFPB) implemented a new mortgage initiative "Know Before You Owe" that is designed to encourage and help consumers understand their loan options, shop for the mortgage and various settlement services that's best for them, and avoid costly surprises at the closing table. This mortgage initiative also includes the TILA/RESPA Integrated Disclosure Rule (TRID) forms consisting of the Loan Estimate and the Closing Disclosure, which affect most residential real estate loan transactions. For home equity lines of credit, reverse mortgages, mortgages secured by a mobile home, or a dwelling not attached to the land see (GFE - Mortgage Loan Disclosure).
A Loan Estimate itemizes and discloses the details, terms and associated costs for your requested mortgage loan; and must be provided to the consumer within three days of their loan application. Requesting a Loan Estimate form a lender is simple and no written documentation is required. However the following six pieces of information are needed by a lender in order to provide a Loan Estimate:
By getting Loan Estimates from multiple lenders, you can compare to see which lender is offering you the best deal. The services listed in Section C. as shown below are required by the lender, but you can save money by shopping for these services separately.
It's important to note that comparing costs for title insurance settlement services on the Loan Estimate will be difficult, due to the required format imposed by the CFPB. Across the United States, title insurance is regulated on a State level and many filed title rates are calculated, marketed and charged in conflict with the CFPB's required Loan Estimate, which is the case in Colorado. Consequently, it's vitally important to effectively shop and compare services, protections and costs, so an informed decision can be made in selecting the right Title Company for your real estate transaction.
The Closing Disclosure is a final statement of a borrower's costs for a mortgage loan, and a copy of the Closing Disclosure must be received by the borrower three business days prior to the scheduled closing. It's important that borrowers compare their Loan Estimate with the Closing Disclosure to double check that all the details and costs are correct, if not, contact the lender immediately.
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