Understanding the Mortgage Transaction: Part 1
Assisting our clients in the mortgage process has become both complex and extensive. Figuring out the seemingly endless costs and fees is one of the most frustrating parts of the entire real estate transaction. Luckily, there are three critical documents that can give the buyer and seller a better handle about what to expect. The three following documents have been released by HUD to help your client better understand how the loan process works:
- The Real Estate Settlement Procedures Act (RESPA) requires that home loan originators you the Good Faith Estimate (GFE) within 3 days of accepting your application. (This went into effect January 1, 2010.)
- The lender must give the borrower a new Settlement Statement HUD-1 when you close. This is the final line-by-line list of mortgage and closing costs.
- With the GFE, you’ll get a “Shopping For Your Home Loan: HUD’s Settlement Cost Booklet” to help you with the above two documents.
Not only do these documents lay out the fees and costs, the booklet serves as a kind of manual to understand exactly how everything is working and how to understand the documents. It would be a good idea to advise your clients to familiarize themselves with these documents before you are in the loan process starts so there aren’t any surprises.
More on Understanding the Mortgage Transaction to come!
