Monday, August 10, 2009

How to Avoid Closing Delays

The federal Truth-in-Lending law changed a couple weeks ago. One of the most important parts of the law says that if the Annual Percentage Rate (APR) on the final Truth-in-Lending disclosure differs by more than 0.125% from the APR that was disclosed on the most recent Truth-in-Lending disclosure issued by the lender, then the loan cannot close until 3 days after the lender delivers an updated disclosure showing the correct APR. Ensuring that the APR is correct is the responsibility of the lender. However, there are a couple things that routinely change near the end of a transaction that are the responsibility of the real estate agents. Here's what a real estate agent needs to look out for:

-- Changing the closing date. If you change the closing date, the number of days of pre-paid interest will change and affect the APR.
-- Not telling the lender if there is a change in the amount of seller-paid closing costs or the sales price. If there is an amendment to the contract that changes the amount of seller concessions or the sales price, that will affect the APR. You MUST tell the lender about any changes so they can re-disclose the APR.

Remember, if the APR changes by more than 0.125% (either higher or lower), then there is a federally mandated 3-day waiting period before the closing can take place. The way to avoid delays is to send all contract changes to the lender immediately and to resist the temptation to change the closing date during the week before the scheduled closing. If you do those two things, then you can blame all delays on the lender :-)

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