New Rules Impact Utah Homes For Sale

Two new government rules will have an impact on how quickly you can buy or sell Utah real estate.  Being aware of these rules now will help you avoid unexpected delays and frustrations with your real estate transaction.

Truth In Lending Requirements

For years, federal Truth In Lending requirements have protected home buyers from unscrupulous lending practices.  Two new additional requirements have just been implemented that will further help you avoid undue pressure when you buy a home.  First, Truth In Lending (TIL) now requires a waiting period of at least a week from the time you apply for a loan until the time of closing.  In reality, most loans close in 30 days; but this new rule ensures that the occasional "rushed" closing still has enough time for the buyer to consider the full implications of the loan for 7 days before the loan (and the puchase of the home for sale in Utah) is finalized.

Second, the government will now require a borrower to receive and sign a Truth In Lending statement a full three days before signing any other closing documents.  Further, if after the initial 3-day wait period, any of the terms of the loan change beyond a certain dollar threshold, a new TIL must be signed and a new wait period begins.  For example, if the loan interest rate changes, or the closing costs change, or the funding dates change, or the loan amount changes, so that the cost of the loan changes above a certain low threshold, then the a new TIL must be signed by the buyer and a new 3-day waiting period begins before the loan can close.

Both of these wait requirements are positive changes and will help reduce the pressure buyers often feel from lenders to close a home purchase when the terms of the loan change at the last minute.

Condo Certification for FHA Insured Loans

The second government rule that may affect how quickly you can buy homes for sale in Utah is the new requirement that  as of October 1, 2009, all condominium projects must re-certify with the Department of Housing and Urban Development (HUD) before any new FHA loans will be approved for condo units in the development.  Recertification involves demonstrating that the condominium project meets certain requirements that reduce the risk to the FHA of insuring a loan in the condo development.

For buyers, this means that if they are the first to apply for an FHA loan in a condo development after October 1, they and their lender will have to work with the Seller and the homeowners association to reapply for certification.   Just gathering the necessary documents and preparing the application could add several weeks to the purchase process.  Then, once the application is submitted, several more weeks could pass before the FHA has time to review and approve the application for certification.  For more information on how this new rule may impact both buyers and sellers of Utah real estate, please see the article I wrote on my Dwell Utah Real Estate blog, Condo Sales May Slow Down:  Find Out Why.

Both the Truth in Lending and the Condo certification rule changes will benefit consumers in the long run.  Knowing about how they may impact the timing of your home purchase or sale ahead of time, will hopefully prepare you for a smooth and well-planned closing.

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