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New forms help applicants understand their mortgages

Posted on Wednesday, September 30, 2015 at 4:42:12 PM

Two new forms for mortgage applicants replace the four previous ones and make the entire process of applying for and closing on residential financing easier and more transparent, according to the Consumer Financial Protection Bureau. 

The two documents that made their debuts in the home loan application process on Oct. 3 are called the Loan Estimate and the Closing Disclosure. Combined, they are expected to help homebuyers better understand their options regarding mortgages so they can find the best fit, and ensure that when they close on their chosen loans they aren't surprised by any fees. The CFPB hopes that helping people identify best-fit mortgages and informing them of all the potential expenses involved will help them find loans that they can afford.

The Loan Estimate document will allow mortgage applicants to compare all of the options available to them, and determine which one they can best afford over time. The Closing Disclosure will inform them of all the fees that come with closing on a home loan. Mortgage applicants will have three days to review the latter form, to ensure they fully understand what they are paying for and why. 

With mortgages as relatively affordable as they are now, and a rate hike likely before the end of the year, these new mortgage documents may end up getting plenty of use in the coming months.