New laws passed this past year which are due to go into effect soon are taking some of the guesswork out of reading mortgage applications and contracts. The Real Estate Settlement Procedures Act is beginning to have some impact on the verbiage used in mortgage documents, a situation that is providing welcome relief to many would-be homeowners.

What Does The Act Do?

Essentially, the Act accomplishes several things. First, it helps to make the terms used in the mortgage contract a little easier to understand. This is a huge plus for people who are intimidated with the legal language used in contracts in general, and makes it a little easier to understand just that type of commitment is being made. Along with this change, the Act also has provisions for the preparation of what is known as a good faith estimate of the closing costs associated with the mortgage. Simply put, lenders will be required to present more realistic estimates of the closing costs, something that has not always happened in every case.

While the changes are subtle at first glance, the fact is that the provisions within this new legislation will make life a lot easier for homebuyers. The process of comparing offers from different lenders will be streamlined to some degree, making it easier to identify the best option and go with the lender that is likely to provide the highest level of service over the life of the mortgage loan. As more of the provisions are rolled out, consumers can expect to see the impact of the law on the lending industry in their local communities.