How TRID Redefined The Home Buying Process

For most people, buying a home goes hand-in-hand with taking out a mortgage loan; you can't have one without the other. As with most financial industries, the mortgage industry is heavily regulated to ensure consumer protection. Last year (on August 1, 2015), a federal regulation was introduced that significantly changed the mortgage loan application and approval process. Today, Arrowhead Title, Inc. is here to examine some of the effects of this new ruling.

What is TRID?

After the housing crash in 2008/2009, the Consumer Financial Protection Bureau (CFPB) was created to protect homebuyers from suffering another comparable financial crisis. The introduction of TRID was part of these efforts. Sometimes referred to as the TILA-RESPA Rule, "TRID" is an abbreviation for TILA-RESPA Integrated Disclosure. "TILA" stands for "Truth In Lending Act," and "RESPA" stands for "Real Estate Settlement Procedures Act." 

How Does TRID Impact You?

This rule does not apply to home equity lines of credit, reverse mortgages, or mortgages covering mobile homes that are not attached to real property. Since it does apply to most all other mortgage loans, however, it impacts the vast majority of homebuyers. If you are buying a house at the Lake of the Ozarks, the mortgage application process you experience and the documents you receive will likely be impacted by TRID. Here is a quick look at some of the ways TRID has impacted the home buying process:
  • Form Consolidation
    • Before TRID, mortgage applicants received four important documents: the Good Faith Estimate, the Initial Truth-In-Lending Statement, the HUD-1, and the Final Truth-In-Lending Statement. TRID consolidated these down to two forms:
      • Loan Estimate (combining the Good Faith Estimate and the Initial Truth-In-Lending Statement)
      • Closing Disclosure (combining the HUD-1 and the Final Truth-In-Lending Statement)
  • Clear and Accurate Fee Disclosures
    • As soon as the borrowers' application is received, mortgage lenders are now required to provide a clear, accurate estimate of all fees associated with a mortgage loan. This makes it easy for buyers to make an informed decision about whether or not to pursue the loan. Buyers can also use this information to compare different loans to determine which option will be best for them.
  • Closing Disclosure Due 3 Days In Advance
    • Under TRID's new ruling, lenders are required to provide the buyers with their closing disclosure three days prior to closing. Instead of feeling rushed at the closing table, this gives buyers time to look over everything thoroughly so that they can ask any clarifying questions in advance (before signing). 

Myths About TRID

Not surprisingly, the introduction of TRID initially caused a great deal of confusion. The professionals have successfully adjusted to the change, but some buyers still hold a few misconceptions about TRID's impact on the housing process. Here are two common myths:
  • The closing process will be delayed by three days.
    • As we mentioned earlier, the closing disclosure is due three days in advance. The closing process is not delayed as a result of this advance delivery.
  • TRID makes it harder for buyers to qualify for loans.
    • TRID's purpose is to prevent greedy mortgage lenders from extending mortgage loans to buyers who they know will not be able to make their payments, as this was the pattern that was largely responsible for the housing crash eight years ago. However, the new rule does not make it harder for buyers to qualify for loans. Rather, it ensures that buyers receive full disclosure of the total cost of their loan so they can make an educated decision.

Questions About Buying A Home? We're Here To Help.

Buying real estate is a major investment, so it is important to ensure that you are confident and comfortable with the process. Our Lake of the Ozarks title experts are here to assist you in any way we can. If you would like more information about the closing process or other aspects of buying a home, you can reach us at 573-302-1950.

The Lake of the Ozarks' Most Trusted Title Company
Where Accuracy Matters!

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750 Bagnell Dam Blvd Suite B
Lake Ozark, MO 65049


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