Mortgage Market Update - Truth in Lending and your Closing Date

I have already heard of a couple of a closings that have been affected by the new truth in lending requirements now required. When a lender discloses an initial truth in lending in todays market there now is a requirement that the final one(provided at closing) has to be within a .125% tolerance. The truth in lending is a form that a buyer signs at loan application that discloses the APR. The Annual percentage rate(APR) is the real cost of funds a buyer pays that takes into account certain closing expenses. In a perfect world buyers are told to compare APR's in choosing lenders with low interest rates - surprise we don't live in a perfect world. Unfortunately some lenders today still utilize misrepresentation and bait and switch tactics.

So what does this have to do with the closing date? Based on the previous topic of HERA HOEPA, most don't realize that lenders are checking the initial truth in lending figure against the final one. Most do know that when it is off by more than .125% the lender must redisclose and now wait 3 days for the client to understand the process.

You know as well as I do that some times figures are changed last minute. In todays environment this could impose delays and you need to make sure that you are in touch with your lender when making these changes due to the potential of causing a delay.

I have done some of the math on the impact to APR based on a change in closing costs

$100,000 loan - $1000 - $1250 change may trigger a change in APR and delay closing

$200,000 loan - $3000 change may trigger a change in APR and delay a closing

Please remember the lower the loan amount the bigger the impact on APR when changes are made.

Now that you can see the math the next item is what closing costs trigger the change in APR. I have gone ahead and prepared a list of fees that are both included and not included>

I understand that sometimes changes need to be made last minute. Working with someone who knows the ins and outs of the new legislation and understanding it impacts your clients loan has never been as important. Clients can be forgiving but the one item they never seem to forget is if they miss the closing date. Set the best expectation and do it right.

Please visit Realtor Toolbox and go to Easy Notes for our APR handout

MORTGAGE RATES Loan Programs Interest Rates* 30 Year Conv. Mid - low 5's 30 Year FHA/VA Mid - low 5's 30 Year Jumbo Mid 6's 5/1 Arm Conv. Low 4's 5/1 Arm Jumbo Mid 5's Please contact us for specific situations and specific rates. *Risk Based Pricing will affect rate offered. MORTGAGE RATE TRENDS DAILY RATE LOCK ADVISORY For an in depth explanation and daily update click on The Daily Rate Lock Advisory. A copy of this newsletter can be found at Market Update. also check out Quick Tips and Home Loan Toolbox