What is RESPA ?
The Real Estate Settlement Procedures Act (RESPA) contains information on the
settlement or closing costs you are likely to face. Within 3 days of the time
you apply for the mortgage, your lender is required to provide you with a "good
faith estimate of settlement costs," based on his or her understanding
of your purchase contract. This estimate should give you a good idea of how
much cash you will need at closing to cover pro-rated taxes, first month's interest,
and other settlement costs.
The act also requires lenders to give you an information booklet, Settlement
Costs and You, written by the U.S. Department of Housing and Urban Development,
which discusses how to negotiate a sales contract, how to work with various
professionals (attorneys, real estate agents, lenders), and your rights and
responsibilities as a home buyer. It also shows an example of the uniform settlement
statement that will be used at your closing.
One business day before you close, you are entitled to see a copy of the Uniform
Settlement Statement with your figures on it so you will know just how much
the final costs will be.