The Closing Disclosure (CD) is a 5-page document showing your final loan terms, monthly payment and closing costs. By law, you must receive it at least 3 business days before closing. Compare it to your loan estimate to catch errors or unexpected changes. Key sections include loan terms on page 1, itemized closing costs on page 2 and the cash to close calculation on page 3.
What Is the Closing Disclosure?
Purpose of the CD
The CD provides:
- Final loan terms
- Exact monthly payment
- Itemized closing costs
- Cash needed to close
- Comparison to your Loan Estimate
When You Receive It
Three-day rule:
- Must receive 3 business days before closing
- Sundays and federal holidays don’t count
- Electronic delivery counts if you consented
Example timing:
| Receive CD | Earliest Closing |
|---|---|
| Monday | Thursday |
| Tuesday | Friday |
| Wednesday | Saturday (if title company open) |
| Thursday | Monday |
| Friday | Tuesday |
Why the Waiting Period Exists
Gives you time to:
- Review all terms
- Compare to Loan Estimate
- Ask questions
- Catch errors
- Prepare funds
Page 1: Loan Terms and Costs Summary
Top Section: Loan Information
| Field | What It Means |
|---|---|
| Loan Term | Length (30 years, 15 years, etc.) |
| Purpose | Purchase, refinance, construction |
| Product | Fixed rate, ARM, etc. |
| Loan Type | Conventional, FHA, VA, USDA |
| Loan ID | Your loan number |
| Rate Lock | Whether rate is locked |
Loan Terms Box
Loan Amount: Principal you’re borrowing
Interest Rate: Your locked rate (verify this matches)
Monthly Principal & Interest: Base payment (not including taxes/insurance)
Prepayment Penalty: Yes or No (should be No for most loans)
Balloon Payment: Yes or No (should be No for standard loans)
Can This Amount Increase After Closing?
Each item shows:
- NO = Cannot change
- YES = Can change (explains when/why)
For fixed-rate loans, principal and interest should show NO.
Projected Payments Table
| Component | Example |
|---|---|
| Principal & Interest | $1,896 |
| Mortgage Insurance | $125 |
| Estimated Escrow | $425 |
| Total Monthly | $2,446 |
Verify this matches what you expected.
Costs at Closing
| Item | Amount |
|---|---|
| Closing Costs | Total from Page 2 |
| Cash to Close | What you bring to closing |
Page 2: Loan Costs (Section A-C)
Section A: Origination Charges
Fees charged by your lender:
| Fee | Description |
|---|---|
| Origination fee | Lender’s processing fee |
| Points | Discount points you purchased |
| Application fee | If charged |
| Underwriting fee | Loan review fee |
Watch for: Fees that appeared or increased from Loan Estimate
Section B: Services You Cannot Shop For
Lender-required third parties:
| Service | Typical Cost |
|---|---|
| Appraisal | $400-$700 |
| Credit report | $30-$75 |
| Flood certification | $15-$25 |
| Tax monitoring | $75-$100 |
These are set by lender; you can’t choose providers.
Section C: Services You Can Shop For
Services where you could choose provider:
| Service | Range |
|---|---|
| Title insurance | $1,000-$3,000 |
| Title search | $150-$400 |
| Settlement agent | $300-$600 |
| Survey | $300-$600 |
| Pest inspection | $75-$150 |
Did you shop? Compare to estimates you received.
Page 2: Other Costs (Section E-H)
Section E: Taxes and Government Fees
| Fee | Typical Amount |
|---|---|
| Recording fee | $50-$200 |
| Transfer taxes | Varies widely by location |
Section F: Prepaids
Items paid in advance:
| Prepaid | Explanation |
|---|---|
| Homeowners insurance | First year premium |
| Mortgage insurance | First month(s) |
| Prepaid interest | Daily interest to month-end |
| Property taxes | If due before first payment |
Section G: Initial Escrow Payment
Money deposited to start your escrow account:
| Item | Months |
|---|---|
| Homeowners insurance | 2+ months |
| Property taxes | 2-6+ months |
| Mortgage insurance | 2+ months |
Number of months depends on when taxes/insurance are due.
Section H: Other
Miscellaneous fees:
- HOA fees
- Home warranty (if any)
- Real estate commissions (informational)
Page 3: Cash to Close
Calculating Cash to Close
| Line | Description |
|---|---|
| Total Closing Costs | From Page 2 |
| − Closing Costs Financed | Rolled into loan |
| + Down Payment/Funds | Your down payment |
| − Deposit | Earnest money already paid |
| − Funds for Borrower | Credits to you |
| + Seller Credits | Money from seller |
| + Adjustments | Prorations, etc. |
| = Cash to Close | Wire this amount |
Did This Change from LE?
Column shows:
- Original amount from Loan Estimate
- Final amount on CD
- Whether change is allowed
Common Cash to Close Adjustments
| Adjustment | Explanation |
|---|---|
| Seller credit | Reduces your cash |
| Prorated taxes | Seller’s portion |
| HOA dues | Prorated |
| Rent credit | If applicable |
Page 4: Loan Disclosures
Assumption
Can someone take over your loan?
- FHA, VA, USDA: Generally yes
- Conventional: Generally no
Demand Feature
Can lender require full payoff before maturity?
- Should be “No” for standard mortgages
Late Payment
| Detail | Information |
|---|---|
| Grace period | Usually 15 days |
| Late fee | Usually 5% of payment |
Negative Amortization
Does your balance grow if payments are low?
- Should be “No” for standard fixed-rate
Partial Payments
Will lender accept less than full payment?
- Most don’t accept partial payments
- Some hold until full payment received
Security Interest
Property is collateral for the loan.
Escrow Account
Whether you have escrow for taxes and insurance.
Page 5: Loan Calculations and Contact Info
Total of Payments
Total you’ll pay over the loan term:
- Includes all principal and interest
- Doesn’t include taxes/insurance
- Eye-opening number
Example: $300,000 loan at 7% for 30 years = $718,527 total
Finance Charge
Total interest you’ll pay over the loan term.
Amount Financed
Loan amount minus prepaid finance charges.
APR (Annual Percentage Rate)
True cost of borrowing including fees:
- Always higher than interest rate
- Use to compare loan offers
- Includes points and fees
TIP (Total Interest Percentage)
Total interest as percentage of loan amount.
Contact Information
Lists all parties:
- Lender
- mortgage broker (if used)
- Real estate agents
- Settlement agent
Comparing CD to Loan Estimate
What Can Change
| Item | Allowed Change |
|---|---|
| Origination charges | None (zero tolerance) |
| Services you can’t shop | 10% total increase max |
| Services you shopped | Unlimited if you chose |
| Recording fees | 10% increase max |
| Prepaids | Can change |
| Initial escrow | Can change |
Zero Tolerance Items
Cannot increase at all:
- Transfer taxes
- Fees paid to lender
- Fees to affiliates of lender
- Services lender didn’t let you shop for
10% Tolerance Items
Combined total can’t increase more than 10%:
- Recording fees
- Third-party services you couldn’t shop for
What to Check
Compare these line by line:
- Interest rate (should match)
- Loan amount (should match)
- Monthly payment (should match or be lower)
- Origination fees (can’t increase)
- Third-party fees (check tolerances)
- Cash to close (understand any changes)
What If Something Is Wrong?
Types of Errors
Serious errors requiring correction:
- Wrong interest rate
- Incorrect loan amount
- Missing credits
- Fees exceeding tolerance
Minor variations (may be acceptable):
- Slight changes in prepaids
- Escrow adjustments
- Title fees within tolerance
What to Do
- Contact your loan officer immediately
- Document the issue in writing
- Reference your Loan Estimate
- Request correction before closing
If Lender Won’t Correct
Options:
- Request in writing
- Ask for supervisor
- File CFPB complaint
- Delay closing (last resort)
Signing the CD
At Closing
You’ll sign the CD as acknowledgment:
- Confirms you received it
- Confirms you reviewed it
- Part of closing document package
What Your Signature Means
Signing indicates:
- You’ve seen the document
- You understand the terms
- You agree to proceed
It doesn’t mean:
- You can’t dispute errors later
- You waive any rights
- Terms can never change (some can per the document)
Frequently Asked Questions
When do I get the Closing Disclosure?
At least 3 business days before closing. This gives you time to review and compare to your Loan Estimate.
What’s the difference between Loan Estimate and Closing Disclosure?
Loan Estimate shows estimated terms and costs early in the process. Closing Disclosure shows final, actual terms and costs right before closing.
Can closing costs change between LE and CD?
Some can, some can’t. Lender fees can’t change. Third-party fees have 10% tolerance limits. Prepaids and escrow can change based on actual amounts.
What if the CD is wrong?
Contact your loan officer immediately. Errors must be corrected before closing. If significant items change, you may get a new 3-day waiting period.
Do I sign the CD before or at closing?
You receive it 3 days before, but sign it at closing as part of your document package.
What triggers a new 3-day wait?
Three things: APR increases by more than 0.125%, loan product changes or prepayment penalty is added. Other changes don’t require new waiting period.
Should I bring anything to closing besides the CD?
Bring valid ID, certified or cashier’s check for cash to close (or wire confirmation) and any documents your lender requested.
What if I find an error after closing?
Contact your lender and title company. Some errors can be corrected. For tolerance violations, lender must refund overcharges within 60 days of discovery.
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Michael Chen
Certified Financial Planner, Mortgage Specialist
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