Real Estate Settlement Procedures Act (RESPA)
Years ago, when a person took on a mortgage loan, they were provided with only the most basic of information. In 1974, the Real Estate Settlement Procedures Act (RESPA) was passed in order to help potential homeowners become more educated consumers. The last update to the Act was made in 2008 and went into effect in 2010.
The purpose of the Act, along with consumer education, is to prevent kickbacks and referral fees. It is now mandated that all borrowers be advised and fully informed. Prior to accepting a mortgage loan, a borrower must understand lender servicing, escrow account practices and closing costs. They must understand who will be involved in the mortgage process and how.
RESPA applies to several types of transactions: purchase loans, property improvement loans, assumptions, equity lines of credit and refinances. Today's borrowers are more informed than in the past and are able to make smarter choices when it comes to buying a home.
Purchasing a home is a large investment. It may be one of the biggest investments you make in your life. When a borrower is informed about all aspects of their mortgage loan and the lending process, they are better able to make decisions that are the best for their families.
If you have questions about the lending process or how to obtain a mortgage loan, an experienced real estate agent will be able to answer your questions. You have a right to make an informed decision when purchasing a home for you and your family.