Just as we are getting familiar with the implemented 3 page Settlement Statement, formerly called the HUD-1 form, we will have another change to the new 5 page Closing Statement that must to be in place by August 15, 2015. The other form that will change is the Loan Estimate which will replace the old Good Faith Estimate. When you compare the two (3 page Settlement Statement and new 5 page Closing Statement) you will see some significant changes.
Some of the changes you will immediately notice:
- The 5 page Closing Statement has to be in the borrower’s hands three business days before closing.
- At the closing table the 5 page closing statement replaces the 3 page Settlement Statement HUD-1
- Another change is the name from Settlement Statement to Closing Statement.
- The Settlement Statement was broken down in line numbers from 100 to 1400
- The Closing Statement is broken down in sections from A to J and in addition you will see the loan terms, Projected Payments, Cost at closing, loan cost, and any other cost you will face at the time of closing.
The reason for the changes to the Closing Statement is to help borrowers understand all the options that are available to them. They can then choose the deal that’s best for them and later at the closing table they can avoid costly surprises.
The Loan Estimate needs to be in the borrowers within three business days after they submit a loan application. This estimate provides a summary of the key loan terms like loan amount, interest rate, monthly principal, and interest. It also gives you the estimated loan and closing costs. All the lenders have to use the same form after August 15th 2015 and this will make it much simpler for the borrower to shop and compare different mortgages.