The Closing Disclosure (CD) is a 5-page federal document that outlines the final terms and costs of your mortgage. Your lender must provide it at least 3 business days before closing.
It details your interest rate, monthly payment, closing costs, cash required to close, and every fee involved. Compare it carefully to your original Loan Estimate. Any unexpected changes should be questioned before you sign.
What's on the Closing Disclosure
The Closing Disclosure is divided into five pages, each covering a different aspect of your loan:
- Page 1: Loan terms (rate, payment, prepayment penalties, balloon provisions)
- Page 2: Projected payments (monthly breakdown of principal and interest, mortgage insurance, escrow)
- Page 3: Costs at closing (all fees, credits, and the total cash needed to close)
- Page 4: Other details (escrow info, contact info, closing agent details)
- Page 5: Additional information about your loan
The 3-Day Rule
Federal law requires you receive the Closing Disclosure at least 3 business days before your scheduled closing. This is known as the 3-day review period, and it is designed to give you time to carefully review the document and compare it against your Loan Estimate.
Do not skip this review. These three days are your best opportunity to catch errors, ask questions, and make sure everything matches what you were told when you applied for the loan. If you wait until the closing table to read it, you put yourself in a position where you feel pressured to sign without fully understanding what you are agreeing to.
CD vs Loan Estimate: What to Compare
Your Loan Estimate (LE) was the good-faith projection you received when you applied. The Closing Disclosure is the final version. Here is what to compare:
- Interest rate: Should match your locked rate exactly. If it changed, you need an explanation.
- Monthly payment: Compare to your estimate. Any increase should be justified line by line.
- Closing costs: Should be within tolerance of your LE. Fees that changed significantly need an explanation.
- Cash to close: The total amount you need to bring to closing. Make sure you are prepared with the right amount.
Any significant changes from the Loan Estimate should be questioned. Some fees can change, but others are bound by tolerance limits under federal rules. If a fee went up more than allowed, you may be entitled to a refund.
Common Issues Found on Closing Disclosures
Over the years, I have seen several recurring issues on Closing Disclosures that buyers should watch for:
- Last-minute fee changes that were not discussed
- Incorrect loan terms, such as wrong interest rate or loan type
- Missing seller credits or concessions you negotiated
- Errors in property tax estimates or escrow calculations
- Unexpected fees that were not on the original Loan Estimate
What to Do If You Find Errors
If something does not look right on your Closing Disclosure, do not panic. Here is what to do:
- Contact your loan officer immediately. Your lender wants to close the loan, so they have an incentive to fix legitimate issues.
- Get an explanation for any discrepancies. Some changes are normal and permissible under federal rules.
- Request a revised CD if needed. Be aware that a corrected CD may restart the 3-day review period.
- Do not sign until everything matches or has been explained to your satisfaction.