TRID Made Easy: 6 Essential Pieces of Information You Need to Know
Buying a home is an exciting step in your life, but it can also be overwhelming. There are many things to consider, and you may feel like you’re drowning in a sea of unfamiliar terminology and complicated legal documents. TRID, or the TILA-RESPA Integrated Disclosure, is one of those terms you may have heard thrown around in the homebuying process. This article will break down what TRID is, why it was created, and the six essential pieces of information you need to know to make TRID easy.
What is TRID?
TRID is a set of rules and regulations introduced by the Consumer Financial Protection Bureau (CFPB) in 2015. Its primary goal is to make the homebuying process more transparent and easier to understand by requiring that mortgage lenders provide a simplified and standardized set of disclosures to borrowers. The CFPB believes that TRID will help consumers better understand the terms and costs associated with their mortgage loans.
Why was TRID created?
TRID was created in response to the 2008 financial crisis. Its purpose is to ensure that mortgage lenders provide borrowers with accurate and complete information about the terms and costs associated with their loans. Prior to TRID, lenders used a separate Good Faith Estimate (GFE) and Truth in Lending (TIL) statement to disclose this information. The problem was that these forms were often confusing, hard to compare, and contained different closing cost estimates, which made it difficult for borrowers to shop around for the best loan offer.
Six essential pieces of information you need to know about TRID:
1. The Loan Estimate
The Loan Estimate (LE) is a three-page document that includes an estimate of the interest rate, monthly payment, and total closing costs for your loan. Lenders are required to provide you with an LE within three days of receiving your loan application.
2. The Closing Disclosure
The Closing Disclosure (CD) is a five-page document that outlines the final terms and costs of your loan. Lenders are required to provide you with a CD at least three days before your scheduled closing date.
3. The Three-day Rule
Under TRID, you have three days to review your CD before you can close on your loan. If you find errors or discrepancies, you can request that the lender make corrections before you sign the final documents.
4. The “Know Before You Owe” Forms
The LE and CD are often referred to as the “Know Before You Owe” forms because they provide borrowers with the information they need to make an informed decision about their loan.
5. The Zero Tolerance Rule
Under TRID, lenders are responsible for ensuring that the fees they charge you during the loan process are accurate. If certain fees on the CD exceed the amounts listed on the LE, the lender is responsible for paying the difference.
6. The Affiliated Business Disclosure
If your lender has a financial interest in an affiliated business, such as an appraisal company, they must disclose this information to you. This helps ensure that you are aware of any potential conflicts of interest that may arise during the loan process.
Conclusion
TRID may seem like just another complicated term in the homebuying process, but it is an essential part of making sure that borrowers have all the information they need to make an informed decision about their loan. By understanding the six essential pieces of information outlined in this article, you will be well on your way to understanding TRID and making the homebuying process easy.
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