As per new laws being regulated as of October 2015, require home buyers to sign pristine documents during the mortgage process. Keep reading to find out the new changes and what you are required to sign if you buy a home nowadays.
Mortgage disclosure law changes in 2015
Consumers who finance their homes here in the U.S. are safeguarded from misuses by two main regulations: The Truth In Lending Act (TILA) and the Real Estate Procedures Act (RESPA).
Correspondingly, TILA and RESPA save you from irrational costs and avert housing service providers (such as lenders and real estate agents) from giving others referral fees for your affair.
The Consumer Financial Protection Bureau (CFPB) imposes TILA and RESPA, and on October 3, 2015, the CFPB integrated all formerly required mortgage rate and fee disclosures into two simple forms to make it uncomplicated for understanding purposes. This enterprise is called the TILA-RESPA Integrated Disclosure Rule (TRID).
The Promissory Note (the note)
The note is the contract with the lender. It will have all of the terms of your loan: the rate, payment intervals, and payment changes. It will state whether or not you’ll incur a prepayment penalty.
The Security Instrument (the mortgage or the deed of trust)
Both a mortgage and a deed of trust pledge the property as security for the note.
Depending on the loan you choose, you’ll need to comply with one of these three occupancy provisions contained in all mortgages and deeds of trust:
• Owner-occupied – you must move into the property within 60 days of closing and live there as your primary residence for at least one year. Then you’re allowed to use it as a rental or a second home.
• Second home – you can only use the property as a second home and aren’t allowed to rent the home.
• Non-owner-occupied – you’re paying a higher rate for this loan, so you’re free to convert occupancy to owner-occupied or second home if and when you see fit.