In late 2015, the Consumer Financial Protection Bureau (CFPB) instituted several revisions to the loan disclosure process required for residential mortgage loans. Known as TRID, the TILA/RESPA Integrated Disclosures Act was designed to help borrowers better understand the terms of their proposed new mortgage loan. Specifically, the Loan Estimate and Closing Disclosure were created in place of previous disclosure forms to ensure consumers are informed and protected from start to finish of the loan application process.
While mortgage professionals have been working with these revisions for close to two years now, many borrowers looking to purchase a home or refinance an existing loan have not experienced these changes first-hand yet. Here we’ve outlined the basics of the Loan Estimate and Closing Disclosure, but if you’re applying for a loan, you are welcome to review this in detail by connecting with your mortgage banker to discuss.
Quick Facts about the Loan Estimate
- Replaced the Good Faith Estimate and Truth In Lending disclosures that were previously used for mortgage loans.
- Provides initial terms of the loan that is being applied for, and estimated figures for closing costs, prepaid items and mortgage payments. May be sent electronically or by snail mail for signature.
- Revised Loan Estimates can be sent during the loan process if terms of the application are changed (such as changes to loan amount, loan product, or interest rate).
- Pro tip: check out an interactive overview of a Loan Estimate.
Quick Facts about the Closing Disclosure
- Provides final terms of the loan for borrowers to review prior to closing.
- Must be sent to borrowers at least 3 business days prior to loan documents being signed, so that there is enough time to review and have any questions answered. May be sent electronically or by snail mail for signature.
- Pro tip: check out an interactive overview of a Closing Disclosure.
Do you have additional questions about the Loan Estimate or Closing Disclosure? Contact us! If you’re considering purchasing a home soon, find out about getting pre-approved!