Buyers in the market have more tools available than ever before. One of the tools is a booklet that lenders are required under the Real Estate Settlement Procedures Act (RESPA) to give to buyers within three days of their application for a mortgage loan.
Because purchasing a home is an important financial decision that should be considered carefully, this booklet will assist the buyer to become more familiar with the different layers of the home buyer process. Included are suggestions of the decision making process on whether to purchase or not and the cost involved in owning a home. The Good Faith Estimate (GFE) is explained in detail along with the HUD 1 Settlement Statement that is received at closing. The information is essential for the buyer as well as to be used as a needed refresher for real estate agents everywhere. There are explanations of the roles of a real estate broker, choosing an attorney, the terms of the sales contract agreement, affiliated businesses, and incentives from builders. The booklet then addresses the different types of loans and insurances. The step by step process of the GFE covers important dates and all the cost involved. For example what cost cannot increase from what is stated in the GFE, what cost cannot have more than a10% increase at closing from what was stated in the GFE, and what cost/changes that could be different at closing than what was stated in the GFE. The table below is included in the booklet.
I applauded the changes with the new HUD1 Settlement Statement as well. There are now three pages instead of two. The third page is set in layman’s terms via a comparison chart of the GFE and cost at closing as well as the buyer’s loan document information. Gone are the days of sitting at the closing table with the buyer’s eyes glazed over with confusion! I have said it before and I’ll say it again, “Education is power, and when you empower someone with education, you build trust and report”. I encourage all real estate professionals to become familiar with the GFE and the HUD1. Dive in, get your feet wet! Understanding the complexities of real estate and being able to communicate to your audience is one of the keys of a successful real estate professional. There will always be change, so embrace it, smother yourself and indulge in the learning atmosphere!