New disclosure forms for mortgage transactions have been created by the federal government’s Consumer Financial Protection Bureau. Lenders are required to give consumers these forms when they apply for a mortgage.
The new forms make the terms and costs of mortgage loans less confusing and highlight information that’s proven to be most important to consumers. The interest rate, monthly payments, and total closing costs are clearly presented, making it easier for consumers to compare mortgage loans.
More information is provided about the costs of taxes and insurance and how the interest rate and payments may change. This information helps consumers decide whether they can afford the mortgage loan, and the home, now and in the future.
The new forms also warn consumers about features they may want to avoid, like penalties for paying off the loan early – and make cost estimates more reliable for any services required to close a mortgage loan.
Consumers will receive the new loan estimate form within three business days after a mortgage application. Consumers will receive the new closing disclosure forms at least three business days prior to closing on their mortgage loan. This will better equip them to raise any questions before they get to the closing table.
