(Originally published October 31, 2009.)
Its common knowledge that when applying for a mortgage, borrowers receive a mailbox full of applications, forms, and disclosures, all sent by the bank, all required by Federal Law. Although some of these disclosures are easier to understand than others, the shear volume of paperwork can often be overwhelming. It doesn’t have to be. The mortgage professional you’re working with should be able to explain it all to you in language you will understand.
Recent changes to Federal Law effect how and when Truth In Lending is disclosed. No fees may be collected from the borrower, including an appraisal fee, until after the borrower is provided these disclosures plus a three day waiting period has elapsed. Therefore, the appraisal can not be ordered, until three days after the applicant receives the Truth in Lending disclosure. These changes are causing delays in many mortgage transactions.
Whenever new laws and guidelines are passed, lenders tend to interpret them differently. This time is no exception. Some lenders are overnighting the TIL, thereby reducing the waiting period to a day or two. Some lenders are allowing mortgage brokers to disclose the TIL, thereby reducing the waiting period even further. Yet other lenders are not allowing the appraisal fee to be collected (and thus the appraisal ordered) for seven business days after the loan is registered!
How can you minimize delays on YOUR mortgage? Home buyers should apply for their mortgage BEFORE the contract of sale is fully executed. No upfront fees will be collected and the appraisal will not be ordered until the contract of sale is finalized. By then, the required disclosures and waiting periods will have been met. For those refinancing, I recommend applying before you lock. However, if you’ve locked at application, much needs to happen within a relatively short period of time. In order to avoid blowing your lock, make sure you IMMEDIATELY submit everything requested by your lender.
Since 1992, Warren Goldberg has helped thousands of clients own their homes, refinance their mortgages, restructure their debts, and invest in real estate. Warren is known for his wide knowledge of mortgage products and wealth-creation strategies.