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What is ‘Know Before You Owe’?

Published 12:16 pm Friday, October 30, 2015

The Consumer Financial Protection Bureau (CFPB) recently established new requirements commonly referred to as Know Before You Owe. The goal is to help consumers better understand all of the terms they are agreeing to, such as the interest rate, what they are actually paying, and if the loan has any special provisions such as a prepayment penalty. When you apply for a mortgage, you will now be able to compare loan offers much easier so don’t be afraid to shop around.

What do consumers need to be aware of?

When you close on the loan, the terms and costs quoted in the Loan Estimate must be the same at closing or on the Closing Document. The Know Before You Owe mortgage disclosure rule replaces four disclosure forms with two new ones, the Loan Estimate and the Closing Disclosure. The new forms are easier to understand and easier to use. In addition, the new requirements contain a mandatory three day waiting period from the time the closing documents are delivered until the loan can actually close. Take this into consideration when setting the closing date and sign up for electronic delivery of your documents to speed up the process.

– Ray Batalona, BECU Mortgage Advisor, 425-609-5481