Buyers searching for Indianapolis homes for sale are experiencing new mortgage disclosure changes when looking for a lender. Backed by the Federal Reserve, Regulation Z is continuing to focus on its job of protecting consumers who are about to leap into homeownership. Because of recent mortgage activity where buyers were getting burned on spiking interest rates, or other items about their financial arrangement were not being exposed to them properly, the truth in lending disclosures just got more stringent.
While five to six years ago it certainly seemed easier to get a mortgage loan, these stricter guidelines will eventually help those Indianapolis residents who looking for homes. These issues were not exclusive to Indiana residents but rather felt all across the United States. Specifically in our area, however, the fallout from the mortgage crisis has been felt in the number of foreclosures in the Indianapolis real estate market as well as surrounding areas.
If you have been out looking for a home with your Indianapolis REALTOR® in the local real estate market recently, you know there are still a large selection of bank-owned and short sale Indianapolis homes on the market. These properties have sent consumers into a tailspin of worry about the possible lessening value of their own homes due to the declining sales prices. And while home sale prices do continue to fall across the state of Indiana at an average of about 6%, the rate of decline is slowing. In addition, the Federal Reserve has set out to swing this pendulum in the other direction and one way to do that is in making mortgage disclosure changes.
Because of this intention to expose borrowers to the vital information about their loans, as of July, 30, 2009, those seeking loans will now receive the following allowances:
•If a borrower is not provided with a required truth-in-lending disclosure regarding the terms of their initial application within three business days, the borrower may walk away.
•Other than credit check fees, lenders are not allowed to secure any funds until the borrower has received this introductory disclosure. Previously, brokers and lenders were able to take fees for such things as appraisals when applications were first filed.
•A final disclosure about truth-in-lending is required before closing within three business days.
•In order to reveal the truth about the value a home has been determined to have, lenders are now required to supply borrowers with a duplicate of their home’s appraisal also within three business days previous to closing. It is important that a buyer know how their home is valued in the current market in which they are borrowing.
•For seven days, lenders are not allowed to close a loan unless borrowers have been mailed or received their first discosure.
•To protect against surprises in the changes in annual percentage rates, if this rate changes more than a borrower was informed, lenders are required to supply another disclosure about costs and then have to provide another three business days until closing.
These mortgage disclosure changes will certainly give buyers more exposure and time to make good and informative decisions about the terms of their mortgages. Ultimately, the responsibility to read and absorb this information is up to the borrower. Make sure to ask your REALTOR® and lender any questions you have before signing on the dotted line.