The residential real estate closing process underwent significant changes in 2015, with the phasing out of the Good Faith Estimate and HUD-1 Settlement Statement. The new system replaced these forms with a Loan Estimate and a Closing Disclosure, respectively. The Loan Estimate is used by lenders to calculate loan terms, while the Closing Disclosure serves to finalize those terms and must be in the hands of borrowers at least three days prior to the closing.
Updates to Residential Real Estate Closing Process
One of the key differences between the old and new systems is that if there are significant disparities between the Closing Disclosure and Loan Estimate, the lender may be required to delay the closing until the differences are resolved. This change was implemented to provide more clarity and protection to borrowers during the closing process.
To help guide their clients through this new system, real estate professionals or their clients can request a copy of the Closing Disclosure from the lender or title agent. This can provide valuable information and insight into the terms and conditions of the loan and help ensure that the closing process runs smoothly. With the help of real estate professionals, clients can be better prepared and informed throughout the entire home-buying process, from start to finish.
