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

I'm frequently asked, what is a TRID disclosures or trid? 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 the TRID disclosures to make the loan mortgage costs much more transparent for the borrowers. So what are TRID disclosures? First off, it stands for TILA RESPA Integrated Disclosures. There are two new disclosures that 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 as whether it's an early prepayment penalty or not. So let's start with talking about the loan estimate which replaces the GFE and the estimated till that used to be sent out to borrowers. This loan estimate document is due to the buyer three days after applying for the loan. It is not a promise to lend, but an estimate of cost so they can easily comparison shop from bank to bank. I'll show you how to understand the loan estimate and go over 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 three 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 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 kind of start from the top and go to the bottom. So it's very black and white. Date issue. That's the date this loan estimate was issued to the borrower. It's the people applying for the loan. It's the property associated with this mortgage. It is the estimated value of the property associated with this mortgage. It's A Term Loan Terms 30, 2015 the type of loan this is refinance or purchase, the kind of product, whether it be fixed or variable and the type of loan it is whether it's conventional, FHA or va, the loan number the bank has assigned with 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. They start with loan terms. It simply tells the borrower the amount that they are applying for. 150,000. It tells them the interest rate they qualified for. And it tells them the monthly principal and interest it tells them in this amount can increase after closing. And it shows them whether there's a prepayment or balloon payment or not. It's very simple to read, as you can see then projected payments. Now the reason this column would be different than the monthable principal and interest is if there's an impound account or PMI or mortgage insurance. This borrower has mortgage insurance and a tax 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. It's the principal and interest plus any mortgage insurance plus any property taxes and insurance for total monthly payment. The next tells the borrower whether it's going to be an impounded loan or not. Escrow, yes or no. And both say yes. The bottom sheet tells the borrower how much the closing costs are going to be in the bottom. 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, 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 that they compare bank to bank to make sure that they're getting the best deal with whatever loan lender that they're going with. So that's how you read the front page of a loan estimate. So let's go to the second page and they'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 what 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 got to pay interest. Whether there is property taxes being impounded, that's not a closing cost, it's an other cost 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 associated with just being a homeowner. So let's talk about this column first. This is very nicely broken down into what's being charged and that they 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 would be a point, half point would be the application fee, the origination fee and the underwriting fee. Now these are fees that aren't. 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 the 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. They want to find a cheaper title search company, they can. But these are fees they can shop for if they choose not to shop for them. These are the fees the vendors that they usually work with charge. And so it breaks down the pest inspection fee, the title insurance binder fee, the title lender title policy, 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 the more specifically fees in costing and getting this refinance. Other costs, once again, these are just fees associated with owning a home, which would be recording costs. It'd be homeowners insurance, mortgage insurance, interest due on the new loan, 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 $5,099. So the bank has very beautifully told them what this $5099 is broken down to 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 estimated $24,000 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, which we've already seen. They subtract 150, the $5,000 from the 150 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, that means there's a surplus of 24,901. And that is what is going to the borrower and 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 and interest? What's the total monthly payment? What's the total closing cost? What's 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 cost so 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 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 and the HUD1 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, projected monthly payments, and how much a borrower pays in closing costs. But the biggest difference is a borrower has been approved and that 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 Notary Public Loan Signing 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.