New Mortgage Rules Could Delay Home Closings, so Ask for a Longer Lockdown
A mortgage rate lock guarantees the interest rate for a specified period of time, protecting you in the event of a rate hike. However, new government mortgage disclosure rules could make loans take longer to close.
The new rules, effective October 3, are meant to make it easier for home buyers to understand mortgage documents, but they also require lenders to have all the paperwork and information from various parties before proceeding with a closure. With the new three-day wait rule (you now have three days to check documents instead of 24 hours), any last minute changes will also extend the closing date.
The Boston Globe explains:
As a result, home closures this fall could take up to 60 days – even for mortgage lenders who have long sought to conduct quick revaluations and place people in their new homes in about a month.
“It will be pretty devastating,” said Richard Wetstein, Framingham’s real estate attorney. “It certainly has the potential to make this fall market very messy.”
For buyers and sellers, the changes mean they will need to collect two to three years’ worth of paperwork, such as the IRS paperwork, to prove their income, and turn them over to mortgage companies faster.
If your interest rate lock is not long enough to cover the closing period, Globe recommends that you prepare to look for an extension for your interest rate lock.
Disclosure Rules Expected To Delay Mortgage Process | Boston Globe