Free TRID Course: Learn How to Go Through the Loan Estimate – Notary Signing Agent Training
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Free TRID Course: Learn How to Go Through the Loan Estimate – Notary Signing Agent Training

I’m frequently asked, “What is a TRID disclosure?”
(or, T R I D) Now, there are courses out there that will charge you for TRID training but
I’m going to train you in this video for absolutely free. So, what is TRID? Now I can’t talk about
TRID without talking about the CFPB, or Consumer Financial Protection Bureau. And just as their
name alludes, this bureau within the Federal Reserve regulates financial products such
as mortgages. The CFPB created TRID disclosures to make the loan mortgage cost much more transparent
for the borrowers. So, what are TRID disclosures? First off, it stands for Tila-Respa Integrated
Disclosure, T R I D. There are two disclosures you should know about and be familiar with
— the loan estimate and the closing disclosure. What is nice about the new forms is that they
clearly detail the loan amount, terms, and features, such whether there’s an early pre-payment
penalty or not. So let’s start by talking about the loan estimate, which replaces the
GFE and the estimate TIL that used to be sent out to borrowers. This loan estimate document
is due to the buyer 3 days after applying for the loan. It is not a promise to lend
but an estimate of costs so they can easily comparison shop from bank to bank. I’ll show
you how to understand the loan estimate and go over it with you right now. So this is
an exact loan estimate a borrower would see, keep in mind you will rarely see these because
loan estimates are sent directly to the borrower 3 days after they apply for the loan. But
since this is a TRID training, I want to show you exactly how you would read a loan estimate
and how it is interpreted by the borrower so if you ever see this, you know how to interpret
it as well. It is very simple and very black and white to understand, just start from the
top and go to the bottom. So it’s very black and white — date issued, that’s the date
this loan estimate was issued to the borrower, this is the people applying for the loan,
this is the property associated with this mortgage, this is the estimated value of the
property associated with this mortgage, this is the loan term, 30, 20, 15, type of loan
this is, refinance or purchase, the kind of product whether it be a fixed or variable,
the type of loan it is, whether it’s conventional, FHA, or VA, the loan number the bank has assigned
to this loan application, and ultimately when the rate lock would expire for the loan that
they’ve applied for. So it’s very black and white information as you can see. And it’s
just as easy to read as you go down the sheet. Let’s start with loan terms. It simply tells
the borrower the amount they’re applying for, $150,000. The interest rate they qualify for,
it tells them the monthly principal and interest, it tells them when this amount increase after
closing, and it shows them whether there’s a pre-payment or balloon payment or not. Very
simple to read as you can see. Then projected payments, now the reason this column would
be different than the monthly principal and interest is if there’s an impound account
or PMI mortgage insurance. This borrower has mortgage insurance and a taxed escrow account.
So this shows the borrower the total monthly payment after PMI and taxes. This column shows
what the payment will be after the PMI disappears and so it goes down. But once again, it’s
very easy to read (projected monthly payments, principal & interest, plus mortgage insurance,
plus any property taxes and insurance for total month payment). The next tells the borrower
whether it’s going to be an impounded loan or not, escrow, yes or no, and they both say
yes. The bottom sheet tells the borrower how much the closing costs are going to be and
the very last column shows the borrower whether there’s going to be money coming to them or
money coming from them. In this case, this borrower is getting $24,000 cash out. But
as you can see this loan estimate is very simple to read, I will show you how they come
up with this number, the estimated closing cost and the estimated cash to close in a
moment, but what you should understand is how simple this is to see loan terms, and
this is the sheet they compare bank to bank to make sure they’re getting the best deal
with whatever lender that they’re going with. So that’s how you read the front page of the
loan estimate. So let’s go to the second page and I’ll show you how they come up with these
two figures, the closing costs and the estimated cash to close. The second page is broken down
into three major tabs, loan costs, other costs, calculating cash to close. So what is the
difference between other costs and loan costs? Loan costs are considered fees that are costing
them to get the loan. Other costs would be considered loan fees that are just associated
with having a mortgage, not associated with the cost to get the loan itself. For instance,
insurance, that’s not a closing cost, that’s just a mortgage cost. Whether you have a house
or not, you have to pay interest. Whether there is property taxes being impounded, that’s
not a closing cost, that’s an other costs because that’s just an association of having
the house. But an appraisal fee is a hard cost, a credit report is a hard cost, so these
are the fees it’s technically costing to get the loan, and these are fees that are just
associated with being a home owner. So let’s talk about this column first, this is very
nicely broken down into what’s being charged and they can compare these to other lenders
if they see the same form. So starting at the top, these are origination fees, these
are fees that the bank’s charging to get the loan. So in this case it would be a point,
half point would be the application fee, the origination fee, and the underwriting fee.
Now these are fees that are third party fees that they have to get to get the loan, which
are vendors that the bank usually works with, that’s why they cannot shop for these. So
these are fixed costs the bank chooses as vendors and they’re kind of stuck with these
fees — and it’s the appraisal, credit report, flood determination, flood monitoring, tax
monitoring, and tax status research fee. These fees they cannot shop for because these are
vendors already pre-chosen by the lender. Now, Part C is telling the borrower that they
can shop for these fees. These fees aren’t fixed, if they want to find a cheaper pest
inspection company, they can. If they want to find a cheaper title search company, they
can. These are fees they can shop for. If they choose not to shop for them, these are
the fees the vendors they usually work with charge. And so it breaks down the pest inspection
fee, the title insurance binder fee, the lender’s title policy fee, the settlement agent fee,
and the title search fee. And so each section is very nicely added up for the borrower.
So these three numbers here equal the total loan costs, or more specifically the fees
in the cost of getting this refinance. Other costs, once again, these are just fees associated
with owning a home which would be recording costs, homeowners insurance, mortgage insurance,
interest due on the new loan, and property taxes, and it shows the initial escrow allotment
they need to put at closing, and so once again it’s very nicely tallied up on what’s charging
what and what’s costing them. And that’s the total fee here. So if you take $2078 plus
$3521, that’s how they get to $5599. Now, the borrower is getting a credit of $500 so
they subtract the $500 credit and that gives them a total closing cost of $5099. Go to
the front page and what do you see? The $5099. So the bank has very beautifully told them
what this $5099 is broken down into individually, what are considered loan costs and what’s
considered other costs but more specifically, what are the total costs. And so that’s how
they come up with an estimate of $5099. So your next question should be, how do they
come up with the estimated $24,901 given to the borrower at closing? That’s also on the
second page. So what they do is they start at the loan amount, $150,000, which we’ve
already seen. They subtract the $5000 from the $150,000 and they subtract the estimated
balance that they’re refinancing, or what the borrower currently owes on the house.
So if you subtract these two numbers from the $150,000, that means there’s a surplus
of $24, 901 and that is what is going to the borrower at close. So this is how you read
a loan estimate, As you can see, all the borrower really needs to do is compare this front sheet
when they comparison shop because these are the black and white numbers. What’s the loan
amount? What’s the interest rate? What’s the principal & interest? What’s the total monthly
payment? What’s the total closing cost? What’s the total cash that the borrower is receiving
back? They just use this front page to comparison shop and TRID has really made it easy for
a borrower to be transparent with the costs to they know exactly what they’re comparing
bank to bank. Now you can see how easy it is for a borrower to see the terms and costs
associated with the loan they’ve applied for. All they need to do is compare the front page
of the loan estimate from bank to bank to know what the best deal out there is. Every
lender is required to present this three days after the borrower applies for the loan, making
it easy to find the mortgage that’s best for them. Now let’s talk about the closing disclosure.
The closing disclosure replaces the truth in lending disclosure in the HUD 1 settlement
statement that used to be sent out to borrowers. A closing disclosure is similar to the loan
estimate in that it details the loan amount, project monthly payments, and how much a borrower
pays in closing costs. But the biggest difference is the borrower has been approved and these
are the final loan terms and closing costs. The lender is required to send the closing
disclosure three days before the borrower signs loan documents. The three day window
allows the borrower time to understand their final terms and costs and compare those costs
to the loan estimate they received earlier. The three days also gives the borrower time
to ask their lenders any questions before they go to the closing table. And this is
why the new closing disclosure is one of the best things to happen to the loan signing
industry. The closing disclosure needs to match the closing statement that is sent out
with loan documents and since the borrower has received the closing disclosure at least
three days before we meet, they should know exactly what their fees already are before
you even walk into the signing. Therefore, their questions should be answered before
you even show up, reducing the time of our loan signings. So now, let’s go over the closing
disclosure and I’m going to show you exactly how to understand this form. Unlike other
courses, i just TRID trained you for absolutely nothing. Imagine what you’ll learn in my Loan
Signing System course — your step-by-step guide to doing a perfect loan signing and
getting more loan signings and making money working for yourself as a loan sining agent.
To take your loan signing agent career to the next level, click on the link on this
video and get the Loan Signing System course today. I’m Mark, I look forward to helping
you become a top loan signing agent.


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