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.
Opinions expressed above are the personal opinions of Kenneth Wohl 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. Kenneth Wohl NMLS #453934.