Big Scary Changes in Real Estate – 5 Tips for a Smooth Closing
You may have heard that there are some big scary changes in real estate, effective October 3. The changes involve TRID or the TILA-RESPA Integrated Disclosure rule. In plain English, there are some new forms with new names and consumers will have to receive the Closing Disclosure three days prior to closing. Doesn’t sound very scary, right? Well, it doesn’t have to be, but if you don’t have the right team in place, you may find yourself starring in a nightmare.
The industry buzz has been that closings are going to have to be set out 45 to 60 days because the extra steps will delay processing and closing times. The truth is, if you are working with a lender, title company, and Realtor that have been prepared, you should not see any delays. I, personally, have a team in place that are working status quo. There will be no delays in closings due to these new rules. Delays in closings can happen for numerous reasons, and sometimes, there is no way to catch an issue that may arise. If you work with people that use tried and true processes and systems, however, these delays are very rare. The consumer does have some responsibility in the process so if you are buying and getting a loan, follow these rules to have the best chance of closing on time:
1. Gather tax returns and pay stubs NOW! You get the picture. As soon as you decide it is time to buy, make a copy of your tax returns for the last two years, your last two pay stubs and your most current bank and investment statements. If you are self-employed, be prepared for more documentation.
2. Drop everything! If your lender asks you to provide more documentation or verification of funds, do it right away. Every day you wait could be an extra day you may not have your new home.
3. Don’t move money around without talking to your lender first. It may seem trivial, but moving $500 from a savings account into a checking account can cause issues when the lender is trying to verify funds. This also goes for large deposits into your accounts that are not from an employer or known source.
4. Don’t buy big ticket items. I know you will be excited to buy that refrigerator, couch, or blinds for your new home but it could delay closing or derail it altogether. A good rule of thumb is to call your lender if you are planning to purchase anything more than dinner at Taco Bell.
5. Don’t open up any new credit cards or pay off any outstanding bills. Any change in your credit can be detrimental. I have heard of credit scores actually going down because a bill was paid off and the account was closed. There is such a thing as too little credit. Again, check with your lender before making any changes to your current credit.
If you are selling your home, the best thing you can do is communicate. If you are working with a Realtor, make sure they are communicating with the Buyer’s agent or the Buyer’s lender if one is being used. You have less control as a Seller but, hopefully, the constant communication will help light fires, if needed, and alleviate any surprises.
A good team on your side is the best way to insure a smooth closing. Make sure you have an experienced Realtor or one with good support if they are newer. You should ask your lender what their average closing times are. Good lenders are ready for the change and shouldn’t need more than 30-45 days for an average conventional loan. Your title company should have a good track record for doing their research proactively and should have experience in finding solutions to title issues that can arise. Hire the right people and you should have more of a fairy tale than a nightmare.
Photos courtesy of Stuart Miles and farconville via freedigitalphotos.net
Michelle Froedge is a residential Realtor and Principal Broker in the Greater Nashville and Williamson County areas of Tennessee. “Mom” to four-legged fur baby, Tyler, Auntie to Zelamie, she is a vegetarian and sings in her spare time. Michelle has lived in Nashville and Franklin since 1997 and has been selling homes since 2004.