Mortgage borrowers in Alaska should now have fewer obstacles in comparing different loan products and better understand the terms and costs associated with their mortgage. The changes are all a part of the new “Know Before You Owe” initiative rolled out by the Consumer Financial Protection Bureau on October 3.
So how will these help you as a homebuyer in Fairbanks, North Pole, Salcha, Fort Wainwright and the surrounding areas of Alaska? We’re happy to walk you through it:
Four documents involved in the process of securing a mortgage have now been reduced to two. The Loan Estimate—which is provided by your lender at the time of mortgage approval— replaces the former Good Faith Estimate and initial Truth-In-Lending Statement. The Closing Disclosure—provided by your lender at the time of closing— replaces the HUD-1 Settlement Statement and the final Truth-In-Lending Statement.
The new documents are much easier to understand than those previously in place. Alaskan homebuyers can know check whether their interest rate, mortgage payment and amount needed in closing costs have changed since their first estimate from the lender. The Loan Estimate also details each service a buyer can shop for, like a pest inspection.
The documents also help the buyer understand the true costs of the loan, both short and long-term. For instance, the Loan Estimate looks ahead at what the buyer will have paid in principal, interest and mortgage insurance after owning the home for five years. Ultimately, buyers will have a much clearer idea of what they owe at closing and what they will have paid over the life of the loan.
Poring over the varied information in closing paperwork can be overwhelming for homebuyers in Alaska, especially those purchasing a home for the first-time, but the good news is that the new mortgage forms help to break it down in a more concise way.
While the new forms should be a great help to homebuyers in the Fairbanks area, it is wise to note that the closing period could now take a bit longer— 45 days as opposed to 30 days.
As your real estate experts in Fairbanks AK and beyond, Madden Real Estate can help answer any questions about the process of buying a home in Alaska! It is our top priority to simplify your homebuyer journey as much as possible.