Buying a home is overwhelming.Prices keep going up.Inventory is low.You are fighting to get your offer to come out on top.You suddenly find success in having your offer accepted and now you have to go through the loan process.In this step, you run across two acronyms that provide you with more confusion than clarity:RESPA and TIL.What are they?
This real estate jargon, explained:
The Real Estate Settlement Procedures Act (RESPA) is to help provide you with clarity and information. Prior to getting to the closing date, not after. It contains details regarding the settlement or closing costs you’ll likely incur. Within three days of your home loan application, your lender must provide a “good faith estimate of settlement costs”.This is calculated according to the real estate contract you entered into with the seller This document shall show the amount of money you will need to cover various expenses like taxes, interest, and other closing costs.
In addition to the above, RESPA has requirements for distributing a pamphlet written by the U.S. Department of Housing & Urban Development and goes over the settlement costs, how to best work with real estate professionals, negotiating tactics in real estate transactions, and your rights as a home buyer.The brochure also provides you a copy of a sample final settlement statementand notifies you of your right to this a day before the close of escrow.
TIL (Truth in Lending)
TIL is to give you clarity on the home mortgage you are trying to get approval for.This Act requires lenders to provide you a statement with details of your loan’s annual percentage rate, finance charges, the amount financed, and the total payments required.
The TIL Statement may also contain information on security interest, late fees, prepayment provisions, and if the mortgage is assumable. If you have a variable rate, the TIL document will go over rate change limits, possible totals for next year, and any caps to the loan. For adjustable rate loans the “total payments” figure is the worst-case scenario. These are the payments if your loan adjusts to the maximum allowed, and then stays there for the loan duration.
The Laura Wucher Team is one of the Bay Area’s leading real estate teams and knows the home buying process.We provide comprehensive services for our client and can go over the nuances of the home loan process with you. Contact us today!