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Welcome back to the series, Millennials Mortgage Process! Buckle up for this post, because initial disclosures, mortgage paperwork, and loan estimates are certainly a bumpy ride.
“Initial disclosures are the preliminary disclosures that must be acknowledged and signed in order to move forward with your loan application. These disclosures outline the initial terms of the mortgage application and also include federal and state required mortgage disclosures.”
Initial disclosures are terrifying. There is a 98% chance you may have a heart attack the first time you see the disclosure. While I realize the word ‘initial’ is in the title, the amount of times that document gets sent to you, with different fees going up and down, is frustrating and confusing.
Even with all the research and preparation I did on the mortgage and home buying process, I wish I had found this article before I was swept up into the frenzy of correspondence with my loan officer and processor. Don’t get me wrong, my lender made every effort to explain what was happening along the way, but I didn’t realize it was such a complicated process.
Yes, I work in the mortgage industry and know what the disclosures and estimates are, but there is a stark contrast between talking about what it is and seeing the details of how much you “might” owe. And I wish I had gotten better advice after going under contract, but the only thing people told me was, “Get ready, in the mortgage process you will be asked for more documents and given more versions of even more documents than you can fathom.” And boy, were they right.
The first time I saw the disclosure, it was a good 15% more than what I thought I would be paying for the house. Thankfully, my loan officer took the time to go through the disclosure and explained that these were all estimated numbers- the property taxes would change with each inspection and appraisal, closing costs could change, home-owners insurance was something I could shop for, etc. And while I had someone sit with me and go through this disclosure, the form is so discombobulated that every time I got sent an updated version, I was lost all over again. In trying to figure out what changed, why the price was different, if I actually ordered or already paid for a survey, and why my property taxes tripled, nothing was clear.
Not to mention how strange it is to have to SIGN every single version of every document I was sent. Personally, I was taught to never sign anything unless it was accurate- the mortgage business has apparently never heard of that life lesson. I felt like I was being told to sign literally everything under the sun, even if the disclosure and loan estimate were still $12,000 more than what I would actually pay, because, “We just need you to acknowledge it. Don’t worry, it’s just an estimate.”
After being dragged through the churning process of estimates, disclosures, last minute changes, late night emails and phone calls, I can now understand why everyone I went to for advice had their eyes glaze over and say, “oh, it’s just a mess- it’s the worst- honestly I forget what they asked for- it’s just too much.” It really is too much and I wish there were better resources out there that I could have taken advantage of to learn ahead of time what would be expected. You can read articles and ask your friends and family for advice, but the fact is: A) the process has changed so much due to more recent regulations, and B) there’s so many people involved on one loan! I felt like a ping-pong ball bouncing between calls from the processor, calling my realtor’s office, getting a call back, running to the bank for another copy of something, emailing a document AGAIN because someone couldn’t find the email- it was a modern-day nightmare.
Thankfully, it all came to a quick end within a span of 3 days. But of course this was after hearing nothing and receiving 1 email over a course of 3 weeks. And just to clarify if you are unfamiliar with the process, an Initial Disclosure, and every iteration of it thereafter (loan estimate, etc.) is different from the Closing Disclosure, the last version of the document with the actual costs and what is due from you at the Closing Table. I received my Closing Disclosure and signed off on it on Friday, and then the following Tuesday night it changed… at 5:21pm the day before I closed. Thankfully, everything went smoothly at the actual closing table, but the path to the closing table was rocky.
If any other business treated their customer like the mortgage industry does, they would be out of business in a matter of minutes. The mortgage industry needs to do more on consumer awareness, above and beyond supplying checklists for documents and warning people not to mess with their lines of credit. People need to be made aware of just how over complicated the actual loan process is. Think I’m being overly dramatic? This article from National Mortgage News further proves my point that there are too few resources for borrowers. I’ve said it before, Millennials love to do our own research and be well informed in our decision-making process. It’s high time the mortgage industry stepped up to the plate.
In my next and final post, I’ll reflect on how different the entire process was compared to my peers and even my parents!
Sadly, your story is not unique. Laughing as I cry.