1. What do Lenders Have To Disclose About Your Real Estate Loan?

by Local Title

When applying for a real estate loan, it’s crucial to have transparency and clarity about the terms and conditions of your financing. Federal regulations mandate that lenders provide specific disclosure forms to consumers to ensure they have the necessary information to make informed decisions. Here’s what lenders are required to tell you about your real estate loan:

Federal Disclosure Forms

Federal “disclosure” forms outline the information that creditor businesses MUST provide to consumers applying for real estate loans. These forms are designed to ensure transparency and protect borrowers’ rights throughout the loan process. As of October 1, 2015, lenders are required to provide two new “TRID” (TILA-RESPA Integrated Disclosure) disclosure forms for the most common kinds of real estate loans.

Loan Estimate

The Loan Estimate is the first disclosure form provided to borrowers. It covers the key features, costs, and risks associated with the mortgage loan. Lenders must deliver the Loan Estimate to the consumer within three business days of receiving the loan application. This form allows borrowers to compare loan offers from different lenders and understand the terms and expenses associated with the loan.

Closing Disclosure

For approved loans, lenders must provide a Closing Disclosure form to borrowers. This form outlines the key transaction costs involved in the loan and must be delivered at least three business days before the loan consummation or closing. The Closing Disclosure provides borrowers with a final breakdown of the loan terms, including interest rates, closing costs, and any additional fees.

Understanding the Disclosures

It’s essential for borrowers to carefully review and understand the information provided in the disclosure forms. These documents outline the terms and costs associated with the loan, allowing borrowers to assess their affordability and make informed decisions. Borrowers should pay close attention to interest rates, loan terms, closing costs, and any prepayment penalties or adjustable-rate features.

Consulting with Your Lender

If you have any questions or concerns about the disclosure forms, don’t hesitate to reach out to your lender for clarification. Lenders are required to provide clear explanations of the terms and costs outlined in the disclosure forms. Your lender can offer guidance and assistance throughout the loan process, ensuring you fully understand your rights and obligations as a borrower.

By understanding the information provided in the disclosure forms and consulting with your lender, you can proceed with confidence in your real estate loan transaction. These disclosure requirements are designed to protect borrowers and promote transparency in the lending process, empowering consumers to make informed decisions about their financing options.