The TRID Checklist: 6 Essential Pieces of Information to Include in Your Disclosures
Effective October 2015, the TILA/RESPA Integrated Disclosure (TRID) rule was implemented by the Consumer Financial Protection Bureau (CFPB). This rule replaced the previous set of disclosures that home buyers received from their lenders, known as the Good Faith Estimate and the Truth in Lending Statement. TRID aimed to make the lending process more transparent and user-friendly for home buyers.
As a result of TRID, lenders are now required to provide potential buyers with a Loan Estimate and a Closing Disclosure. These disclosures are meant to provide borrowers with the essential information they need to make informed decisions about their home purchase.
Here are 6 essential pieces of information that lenders must include in their TRID disclosures:
1. Loan Terms
The Loan Estimate must include the loan amount, the interest rate, and the loan term. It also includes whether the interest rate and payments can change, and if so, how much they can go up or down.
2. Projected Payments
Lenders must also include projected monthly payments, including principal and interest, as well as estimated taxes, insurance, and any other fees such as homeowners association fees or mortgage insurance.
3. Closing Costs
Closing costs must be provided on both the Loan Estimate and the Closing Disclosure. These costs include lender fees, third-party fees, and taxes.
4. Cash to Close
Lenders must disclose the total amount of money a borrower will need to bring to closing. This includes the down payment, closing costs, and any prepaid expenses such as property taxes or homeowners insurance.
5. Escrow Accounts
If the borrower is required to have an escrow account to pay for taxes and insurance, the estimated monthly payment for these expenses must be provided on the Loan Estimate.
6. APR
The annual percentage rate (APR) is a rate that reflects the total cost of the loan, including interest and fees. It must be disclosed on both the Loan Estimate and the Closing Disclosure.
Summary
In summary, the TRID rule requires lenders to provide borrowers with essential information to help them make informed decisions about their home purchase. The Loan Estimate and the Closing Disclosure must include loan terms, projected payments, closing costs, cash to close, escrow accounts, and APR. By understanding these six essential pieces of information, home buyers can be confident in their decision-making and feel more in control of their home purchasing process.
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