A Loan Will Take Longer Now

October Cover

How time flies.  We are now in the last quarter of 2015!  As the weather cools, so does the traditional real estate market in Orlando.  The remainder of 2015 will be an interesting time for real estate transactions, as the entire industry prepares to embrace the implementation of the new federally mandated Truth in Lending/RESPA integrated Disclosure (TRID) rule on October 3, 2015.

This new rule profoundly affects the way lenders provide loans to homebuyers.  Although the way homebuyers purchase from home sellers are not fundamentally changed, the lending process is sufficiently changed to warrant a revision of the standard residential real estate contract for sale and purchase.  This new contract (FR/BAR-4) goes into effect September 28, 2015.

The most significant change to a transaction is the time it will take to consummate a loan/sale.  In the past it was common to complete a loan in 30 days, and close shortly after.  Now the standard time frame for obtaining a loan is extended to 45 days, with potential closing extension of 10 additional days for compliance with the new rule.  Essentially, buyers and sellers can now expect a wait of about 2 months to complete a sale.

This is a significant amount of time in an age where technology has shortened the time frame for many of our endeavors.  We now prepare sellers that if we get their home under contract in one month, they still have to budget a 3-month overall window before the sale is completed.  That’s ¼ of a year in an ideal scenario!

Of course, the same goes for the homebuyers as well.  Assuming we help the homebuyers find the dream home in one month, it will be 3 months before they will move in.  So we may naturally start the process a bit earlier than before.

As market leaders, we are well prepared for the coming changes.  We will be preparing our buying and selling clients accordingly in this new environment.

Enjoy your October.  As always, if you have any questions about real estate, give us a call.  We are happy to discuss any and all real estate matters with our neighbors.

Until next month, take care!