Mortgage process made easier with new federal consumer tools

Shopping for a mortgage can often be a bit overwhelming, but new rules and tools implemented by the Consumer Financial Protection Bureau may make the process a bit easier to navigate.

The stress of applying for most mortgages has been reduced since October 3, when the new mortgage disclosure rule took effect. The rules are designed to ease the process of taking out a mortgage, helping buyers save money, and ensuring “you know before you owe.”

Here’s what’s changed:

• Four overlapping disclosure forms will be streamlined into two forms, the Loan Estimate and the Closing Disclosure.
• More time to review closing documents. Before, lenders had to give the HUD-1 Settlement Statement disclosure 24 hours in advance, if requested. Consumers now receive the Closing Disclosure three business days before forms are to be signed and the terms of the mortgage accepted, no request needed.

Here’s how these changes will improve the mortgage process:

• The new forms will make it easier to understand complicated mortgage terms.
• The Loan Estimate makes it easier to shop around and compare loan offers from multiple lenders. Consider applying for loans from at least three lenders before choosing a mortgage.
• The three days required between receiving the Closing Disclosure and signing on the dotted line allows buyers time to make sure there aren’t major changes from the original deal offered on the Loan Estimate. It also provides time to ask the lender any and all the questions buyers might have about the terms of the mortgage and consult with a lawyer or housing counselor.

To further guide buyers and clarify the process, the bureau has released a Home Loan Toolkit, with worksheets and conversation starters to assist at key points in the mortgage process. The “Owning a Home” site has also been updated with an overview of the mortgage process. It offers tools and resources to help buyers learn more about loan options, make decisions, and prepare for closing.

Housing counselors approved by the U.S. Department of Housing and Urban Development (HUD) are another great resource. They can offer independent advice about whether a particular set of mortgage loan terms is a good fit based on your objectives and circumstances, often at little or no cost to the buyer.