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WASHINGTON, D.C. — Today the Consumer Financial Protection Bureau (CFPB) is releasing new online tools as part of its Know Before You Owe initiative aimed at helping consumers navigate the mortgage process. The tools provide an interactive, step-by-step overview of the mortgage process, help homebuyers decide how much they can afford to spend, and help consumers explore and use the new Know Before You Owe mortgage forms. Creditors will have to begin providing the new forms on Oct. 3, 2015, making it easier for consumers to understand mortgage options and comparison shop between multiple loan offers.
“Our new mortgage forms reduce the information gap between lenders and consumers, shedding light on a process that often feels like a mystery,” said CFPB Director Richard Cordray. “It is time consumers have more power in the mortgage process, and our new forms and online tools will help make that a reality.”
Know Before You Owe Mortgage Forms
The Dodd-Frank Wall Street Reform and Consumer Protection Act directed the Bureau to combine certain federal mortgage disclosures that consumers receive when taking out a mortgage. In November 2013, after extensive testing, the CFPB finalized the combined, easier-to-understand Know Before You Owe mortgage forms – the Loan Estimate and Closing Disclosure. Consumers applying for most mortgages on or after Oct. 3, 2015 will receive the new disclosures. The forms will better help them understand their options, choose the deal that’s best for them, and avoid costly surprises at the closing table.
The Loan Estimate details the transaction, including the estimated loan and closing costs. Consumers can use this form to do apples-to-apples comparison shopping between loans. The Closing Disclosure, which details the final transaction, is provided to consumers at least three business days before closing. This time period allows consumers to confirm whether they are getting what they expected, ask questions, and negotiate over any changes. The Loan Estimate and Closing Disclosure mirror each other, making it easy to compare estimates with final loan terms.
“Owning a Home” Tools
The CFPB first launched “Owning a Home” in January as part of its Know Before You Owe mortgage initiative. It is an online, interactive suite of tools written in plain language to help consumers navigate the mortgage process and make decisions. Mortgages have different terms and features, such as the loan term, loan type, and interest rate. Consumers also need to consider how much they can afford to spend on a home.
Today, the CFPB is adding new tools to the “Owning a Home” site to help consumers throughout the experience of shopping for a mortgage. The new tools help consumers decide if owning a home is the right choice, understand what they need to do to get a mortgage, find the best offer, and close the deal. The new “Owning a Home” tools include:
The newly updated “Owning a Home” site also includes previously released resources such as the closing checklist, a loan options guide, and a tool to help consumers explore interest rates.
“Owning a Home” can be found at: http://www.consumerfinance.gov/owning-a-home
Additional Know Before You Owe Resources
In addition to today’s release of new “Owning a Home” tools, the CFPB has also previously created other Know Before You Owe resources to help make the mortgage shopping process easier for consumers to navigate. These include:
A Know Before You Owe mortgage initiative press kit is also being released today. It helps visually explain the new forms and tools and includes sample documents, a video, photos, and infographics. It can be found at: http://www.consumerfinance.gov/newsroom/press-kit-for-know-before-you-owe-mortgage-disclosures/