Timing is everything, and that is especially true when purchasing a house. Whether you’re waiting for the right home or applying for a mortgage, there are many time-sensitive processes to follow to ensure you can get the home and the financing you want.
It may seem like there’s a lot of hurry up and wait going on. But because it is likely the biggest purchase you’ll make in your life, there’s a good reason for the wait.
For traditional mortgages, the most noticeable is the three business-day waiting period between receiving your closing disclosure and the consummation date (often known as your closing day). This three business-day rule was introduced in October of 2015, and it applies to both original mortgages and refinancing.
When your three business-day waiting period starts is determined by your consummation day. This three business-day rule may include Saturdays, but it does not count Sundays or holidays.
For instance, if you want to sign on a Friday and a holiday falls on a Thursday, you must receive your closing disclosure on Monday. Because of this, the three-day period is NOT measured by hours.
You can sign the closing disclosure any time before you sign your final documents on your consummation day.
This waiting period gives you time to review all the documents to ensure that the terms you’re agreeing to match the terms outlined at the beginning of the mortgage process when you received your loan estimate (which lenders are required to disclose no later than three days after receiving your completed application).
The closing disclosure will show you the final terms of your mortgage, including your purchase price, interest rate, APR, closing costs, monthly payment, and more. Between the closing disclosure and consummation, if the APR, loan product type or prepayment penalty changes, that would require a revised closing disclosure, which in turn would require a new consummation date. Other changes to terms and costs outside of these (like title fees and insurance), will warrant a corrected closing disclosure, but will not require a new three business-day waiting period.
Basically, the closing disclosure is designed to protect you from bait-and-switch tactics if a lender promised you one set of terms but then presents worse terms just prior to the consummation day.
Source: https://www.consumerfinance.gov/know-before-you-owe/
Opinions expressed above are the personal opinions of RCB Bank personnel and meant for generic illustration purposes only. With approved credit. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. Some restrictions apply. RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151.
FAQs
A consumer may modify or waive the right to the three-day waiting period only after receiving the disclosures required by § 1026.32 and only if the circ*mstances meet the criteria for establishing a bona fide personal financial emergency under § 1026.23(e).
What is the 3 day rule for loan disclosure? ›
Your lender is required by law to give you the standardized Closing Disclosure at least 3 business days before closing. This is what is known as the Closing Disclosure 3-day rule. This requirement is thanks to the TILA-RESPA Integrated Disclosures guidelines, which went into effect on October 3, 2015.
How do you count the 3 days from the closing disclosure? ›
This three business-day rule may include Saturdays, but it does not count Sundays or holidays. For instance, if you want to sign on a Friday and a holiday falls on a Thursday, you must receive your closing disclosure on Monday. Because of this, the three-day period is NOT measured by hours.
What triggers a new 3 day waiting period? ›
The requirement for the additional three business-day waiting period once the Closing Disclosure has been delivered applies under three specific scenarios: 1) an inaccurate APR, which violates the established tolerances; 2) the addition of a prepayment penalty; or, 3) a change in the loan product.
What would trigger the 3 day waiting period resulting in a delay in closing? ›
Changes that require creditors to provide a new Closing Disclosure and an additional three-business-day waiting period after receipt include: changes to the APR above 1/8 of a percent for most loans (and 1/4 of a percent for loans with irregular payments or periods) changes the loan product.
Can a loan be denied after closing disclosure? ›
Despite receiving the Closing Disclosure, loan approval is not guaranteed, and unforeseen circ*mstances can lead to denial, such as changes in financial status or property issues discovered during underwriting.
What happens if I don't get my closing disclosure 3 days before closing? ›
What should I do if I do not get a Closing Disclosure three days before my mortgage closing? If you have not received this document, you should request one from your lender immediately. You should also not go through with the closing until you receive and review the Closing Disclosure.
What would require a corrected closing disclosure and a new 3 business-day waiting period? ›
However, the creditor must ensure that a consumer receives the corrected Closing Disclosure at least three-business days before consummation of the transaction if: (1) the change results in the APR becoming inaccurate; (2) if the loan product information required to be disclosed under the TRID Rule has become ...
Which loan has a 3 day right of rescission? ›
The right of rescission allows borrowers to cancel a home equity loan, line of credit, or refinance with a new lender within three days of closing. Rescission is the voiding of a contract that a court does not recognize as legally binding.
How do you calculate the 3 day trid rule? ›
Note: If a federal holiday falls in the three-day period, add a day for disclosure delivery. The three-day period is meas- ured by days, not hours. Thus, disclosures must be delivered three days before closing, and not 72 hours prior to closing.
If the Closing Disclosure is acknowledged on a Thursday, for example, the borrower can sign loan docs on the following Monday; Friday would be Day #1; Saturday would be Day #2; and Monday would be Day #3 (borrower can sign on Day #3).
Does initial disclosure mean I'm approved? ›
Initial disclosures let you know what you can expect in terms of cost, monthly payments, and loan structure. While these terms are not final, they generally will not increase unless there is a legitimate change in circ*mstance.
Does closing disclosure mean loan is approved? ›
Your loan is approved, or deemed “clear to close,” before you receive the closing disclosure. Be aware, however, that if you make a major financial change (like quitting your job or opening a new line of credit) around this time, your lender could still deny your loan.
Which of the following circ*mstances requires a new three-day review of the closing disclosure? ›
If the overstated APR is inaccurate under Regulation Z, the creditor must ensure that a consumer receives a corrected Closing Disclosure at least three business days before the loan's consummation (i.e., the inaccurate APR triggers a new three-business day waiting period). 12 CFR § 1026.19(f)(2)(ii).
What happens if I don t get my closing disclosure 3 days before closing? ›
What should I do if I do not get a Closing Disclosure three days before my mortgage closing? If you have not received this document, you should request one from your lender immediately. You should also not go through with the closing until you receive and review the Closing Disclosure.
What must be delivered to the buyer at least 3 days prior to consummation or closing? ›
The Closing Disclosure must be delivered to the borrower at least three business days prior to the consummation of the loan.
