6 Deadly Mistakes That Delay Home Purchases in Utah (What is TRID and How to Avoid Delays)
The worst part about not knowing what TRID is and getting mortgage advice is interpreting everything from all the parties that get involved: mortgage brokers, Realtors, insurance agents, attorney or title escrow officer, tax accountants, financial adviser, plus your friends, family and colleagues. Since your Lender is involved in every aspect of you getting a loan for your home purchase, make sure you choice a top lender or mortgage broker that has being doing loans for a while.
Here are the six easy mistakes that can cause problems in you getting a loan or not during the mortgage process. Get help from your mortgage lender so you can stay away from all of the pitfalls. Make sure you ask how many loans they have closed since October, how long they have been in the business, and what does TRID stand for.
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What is TRID and what does TRID stand for?
On October 3, 2015, home buyers in Utah and across the country that are applying for a mortgage will receive a new rate and free quote forms from their lenders.
Buyers receive disclosures that are required by the federal government. TRID stands for TILA-RESPA Integrated Disclosures. The purpose of TRID is to make it easier for you to understand free quotes and rates that a Lender gives to the buyer. Keep in mind that it will also slow down the buying process when you go to close on your new home purchase.
Mortgage Brokers or Lenders will disclose and deliver these documents that have the new rate and fees a couple of times during the loan application process — after you have applied and again before closing. It has to go by the timing rules too.
When it comes to getting an offer accepted or not it boils down to speed. When a seller’s review offers they will look at the time the house will close. This can result between a seller accepting and not accepting your offer. Here is what you can do to make sure your offer gets accepted.
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Excluding information on your financial profile
A good lender in Utah will begin by asking and reviewing your personal and information on how to contact you, where you are employed and housing history, how much money you make, debts, and assets.
Sounds easy, right? Only if you respond to every question, whether it’s face to face or on paper. If you don’t provide every single detail about your financials, it can cause the entire loan process to be thrown off.
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Not providing all pieces of documentation
Next your mortgage broker or lender will ask for detailed documentation for your entire profile which will verify what you had said on the phone. Here are some of the things that they may request:
- Two years of tax returns and W-2s
- 30 days of pay stubs
- Two months of statements for all asset accounts
- Year-to-date business financial statements if you’re self-employed
- A home insurance quote with adequate coverage
- Explanations and paper trails of all deposits (and often withdrawals) above $1,000
- Full financials on any other homes or businesses you own
Even if one single piece of paper is not there, you will still need to provide it. If your salary is based on commissions or not consistent in any way, you will have to authorize your lender to verify the income directly with all current and all past employers.
The Mortgage Broker or lender will also check your credit, which reveals employers and their addresses, every debt and all other credit inquiries that you forgot to mention. If new information is disclosed, you will be asked to explain and document every bit of it.
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Knowing the difference between pre-approval and approval
Not knowing or being confused about the approval status will kill the deal and can be stressful. So if you can remember only one thing from this blog and that is: have an under writer approve your loan approved before you write any offer to purchase a home unless it is a seller’s market. Ask Blake Rounkles about what you should do if the market is hot.
Pre-Approval means you have spoken to mortgage lender or have given some documents and have been told based on the information you have given the Lender that everything looks good. This is NOT an approval just FYI.
When you have been Approved it means that you have “underwriting approved” and have been given a commitment for a formal loan. If you have been told anything else it means that your profile has been evaluated, but your loan approval will not start until your Mortgage Broker has submitted all of your files to an underwriter.
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Not sharing the details of the purchase contract with the lender
The REPC or real estate purchase contract — or the offer you write to purchase a home — will indicated how the transaction timing and deadlines are made like how many days you have to do your due diligence, financing and appraisal deadlines, and when you have to close on the new home.
Blake Rounkles or your Realtor will take the lead here, but make sure your lender and real estate agent are in on the same page, because the mortgage broker or lender must follow these critical deadlines that your agent writes into the contract.
If you miss either of these dates in your contract, you risk losing your earnest money on the home. The only way your lender can provide accurate timelines is if they’ve executed all the steps above properly.
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Not Being Knowledgeable About Rates
Once the offer has been accepted by the seller and your under contract to purchase the home, you are ready to lock a your mortgage rate. Remember you will not be able to lock your rate unless you have a signed contract and a property for the lock.
What this means is you are subject to the rates going up or down until you have a contract. Rates will and do change throughout the year so keep this in mind too. Rates are based on the bond markets trades. Mortgage Rates are priced based on how long they’re locked, so the shorter a lock the lower the rate.
Since the new TRID laws it is harder for lenders to do what is called a bait and switch. This means they quoted you a real low rate and then when they go to close they change it to a high interest rate. If rates rise and you’re on the bubble it may mean the difference of you qualifying or not. To avoid rate surprises, ask your lender to quote rate locks based on your closing timeline.
I hope that since you searched “what does TRID stand for” you will have a better idea as to why the new TRID laws will slow down the process of buying a home in Utah. The Lender and Title Company will also affect this so make sure you interview them as well. If you have questions about the new TRID laws feel free to call me at 801-589-2437.