What the closing form changes mean for buyers
Closing forms: What's changing
• The three-day rule is the biggest change to mortgage closings -- borrowers need to receive their loan estimate three days after an application is signed. And most important, they must receive their closing documents three days before settlement. If significant changes are made to the closing document, the lender will need to revise the closing document and the closing will have to be delayed by three days.
• The good faith estimate, truth-in-lending and HUD-1 settlement forms will disappear. Replacing the good faith estimate and the early truth-in-lending statement will be the loan estimate form, which summarizes the terms of a mortgage and estimates loan fees and closing costs. The new form combines the good faith estimate with the early truth-in-lending statement into one shorter document.
• The loan terms are clearly stated and the estimated closing costs -- and an explanation of what they are -- are also more user-friendly.
• Replacing the final truth-in-lending statement and the HUD-1 settlement will be the closing disclosure form, which provides a detailed account of the entire real estate transaction, including loan terms, fees and closing costs. The new document combines the truth-in-lending statement and the HUD-1 settlement into a form that is shorter and more user-friendly. It's easier for consumers to read.