What is a Closing Disclosure?
Short answer
The Closing Disclosure is a standardized document your lender provides at least three business days before closing. It shows the final loan terms, projected monthly payment, all closing costs line by line, and the exact cash-to-close amount. It is the document that confirms every financial detail of the transaction before you sign.
Written by Bri Bond-Erwin
The full explanation
What the Closing Disclosure is
The Closing Disclosure is a federal form lenders are required to give buyers at least three business days before the scheduled closing date. It is the final, binding version of the transaction's financial details, replacing earlier estimates with confirmed numbers.
What it covers
The document is organized into several sections:
- Loan terms: the final loan amount, interest rate, whether the rate is fixed or adjustable, and notes on any prepayment penalty or balloon payment
- Projected monthly payments: an estimate including principal, interest, mortgage insurance if applicable, and escrow contributions for property taxes and homeowners insurance
- Closing costs: a complete line-by-line breakdown of every fee and charge in the transaction, organized by category
- Cash to close: the exact amount the buyer needs to bring to closing, after accounting for the down payment, all closing costs, earnest money already paid, seller concessions, lender credits, and any other negotiated adjustments
- Other disclosures: information about real estate agent compensation, seller credits, and additional required disclosures
How to use it
Buyers receive the Closing Disclosure several days before closing specifically so they can review it. Comparing it to the original Loan Estimate is one of the most practical things you can do. Most costs should be similar to what was estimated. If a fee that was supposed to be fixed looks significantly higher, or something appears unfamiliar, contact your lender to get an explanation before closing day.
Reviewing the Closing Disclosure in advance means you arrive at the table knowing exactly what you are signing and exactly what you are bringing. Questions are much easier to resolve before closing than at it.
Who provides it
Your mortgage lender prepares and sends the Closing Disclosure. If anything is unclear, contact your lender or the closing attorney or title company directly. The three-day period exists to give you time to ask.
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