What a closing disclosure is and when it’s provided

A closing disclosure is a document that outlines the final terms and costs of a mortgage loan. It’s provided to the borrower by the lender at least three business days before the closing date of the loan. The closing disclosure replaces the Truth in Lending Disclosure and the HUD-1 Settlement Statement, which were previously used in the loan process.

The closing disclosure is an important document that borrowers should carefully review before closing

The closing disclosure provides important information about the loan, including:

Loan terms: 

The closing disclosure includes details about the loan, such as the interest rate, term, and any prepayment penalties.

Projected monthly payment: 

The closing disclosure provides an estimate of the monthly payment for the loan, including principal, interest, taxes, and insurance.

Loan costs: 

The closing disclosure lists all of the costs associated with the loan, such as appraisal fees, origination fees, and title insurance.

Closing costs: 

The closing disclosure includes a detailed breakdown of all closing costs, including fees charged by the lender, third-party fees, and prepaid items.

Cash to close: 

The closing disclosure provides an estimate of the amount of money the borrower will need to bring to the closing table.

The purpose of the closing disclosure is to ensure that borrowers understand the terms and costs of their loan before they close on the loan. By providing this information in advance, borrowers can compare the closing disclosure to the loan estimate they received earlier in the process to ensure that there are no surprises at the closing table.

It’s important for borrowers to carefully review the closing disclosure and ask questions if they don’t understand any of the terms or costs. Borrowers should also compare the closing disclosure to their loan estimate to ensure that the final terms and costs match what they were originally quoted.

How to read and understand a closing disclosure

Reading and understanding a closing disclosure can seem daunting, but it’s important to carefully review this document before closing on your mortgage loan. Here are some tips on how to read and understand a closing disclosure:

Check the basics: 

The first section of the closing disclosure contains basic information about the loan, such as the loan amount, interest rate, and monthly payment. Make sure these numbers match what you were originally quoted and expected.

Review loan costs: 

The next section lists all of the costs associated with the loan, such as appraisal fees, title insurance, and loan origination fees. Make sure these fees match what you were originally quoted and expected.

Check for changes: 

If there are any changes from the loan estimate, they will be highlighted in the closing disclosure. Look for any unexpected changes and ask your lender to explain them if needed.

Look at cash to close: 

The “Calculating Cash to Close” section provides an estimate of the total amount of money you will need to bring to the closing table. Make sure you have the funds available to cover this amount.

Review other costs: 

The closing disclosure lists other costs associated with the loan, such as prepaid interest and property taxes. Make sure these costs match what you were originally quoted and expected.

Check seller credits: 

If the seller is providing any credits toward the loan, they will be listed in the closing disclosure. Make sure these credits are accurately reflected.

Review the loan summary: 

The last page of the closing disclosure provides a summary of the loan terms and costs. Make sure all of the information is accurate and matches what you were originally quoted.

It’s important to carefully review the closing disclosure and ask questions if you don’t understand any of the terms or costs. If you notice any errors or discrepancies, bring them to the attention of your lender or settlement agent. By carefully reviewing the closing disclosure, you can ensure that you’re getting the loan you expected and avoid any surprises at the closing table.

What information is included on a closing disclosure

A closing disclosure is a document that provides detailed information about a mortgage loan, including the final terms and costs. The information included on a closing disclosure typically includes the following:

Loan terms: 

This section includes information about the loan amount, interest rate, and term.

Projected monthly payments: 

This section provides an estimate of the monthly payments, including principal, interest, taxes, and insurance.

Loan costs: 

This section lists all of the costs associated with the loan, including origination fees, appraisal fees, and title insurance.

Closing costs: 

This section provides a detailed breakdown of all closing costs, including fees charged by the lender, third-party fees, and prepaid items.

Cash to close: 

This section provides an estimate of the amount of money the borrower will need to bring to the closing table.

Summaries of transactions: 

This section includes a summary of the borrower’s transaction, including the amount financed and the finance charge.

Loan disclosures: 

This section includes disclosures required by law, such as information about the borrower’s right to rescind the loan.

The closing disclosure is an important document that borrowers should carefully review before closing on a mortgage loan. By reviewing the information included on the closing disclosure, borrowers can ensure that they understand the terms and costs of their loan and can make informed decisions about their financial future.

What to do if there are errors on a closing disclosure

If there are errors on a closing disclosure, it’s important to address them before the loan is finalized. Here are the steps to take if you find errors on your closing disclosure:

Review the document: 

Carefully review the closing disclosure and make a note of any errors or discrepancies.

Notify your lender: 

Contact your lender and inform them of the errors. Be specific about what information is incorrect and provide documentation to support your claims.

Request a corrected disclosure: 

Ask your lender to provide a corrected closing disclosure with the corrected information.

Review the corrected document: 

Carefully review the corrected closing disclosure and ensure that all of the information is accurate.

Ask questions: 

If you have any questions about the corrected document or the loan terms, ask your lender for clarification.

Make any necessary corrections: 

If there are still errors on the corrected closing disclosure, work with your lender to make any necessary corrections.

It’s important to address any errors on the closing disclosure as soon as possible, as delaying the process could potentially delay the closing of your loan. By being vigilant and taking the necessary steps to address any errors, you can ensure that your loan terms and costs are accurate and that you’re getting the loan you expected.

How a closing disclosure affects the closing process

A closing disclosure is an important document that outlines the final terms and costs of a mortgage loan. The document is provided to the borrower by the lender at least three business days before the closing date of the loan. The closing disclosure replaces the Truth in Lending Disclosure and the HUD-1 Settlement Statement, which were previously used in the loan process.

The closing disclosure is a critical part of the closing process, as it ensures that borrowers understand the terms and costs of their loan before they close on the loan. By providing this information in advance, borrowers can compare the closing disclosure to the loan estimate they received earlier in the process to ensure that there are no surprises at the closing table.

If there are errors on the closing disclosure, the closing process may be delayed while the errors are corrected. This is why it’s important for borrowers to carefully review the closing disclosure and ask questions if they don’t understand any of the terms or costs. Borrowers should also compare the closing disclosure to their loan estimate to ensure that the final terms and costs match what they were originally quoted.

Once the closing disclosure is finalized and all of the terms and costs are agreed upon, the loan can proceed to closing. At the closing, the borrower will sign the loan documents and provide any necessary funds for the down payment and closing costs.

In summary, the closing disclosure is a crucial document in the loan process that ensures that borrowers understand the terms and costs of their mortgage loan. By carefully reviewing the closing disclosure and addressing any errors or discrepancies, borrowers can ensure that their loan terms and costs are accurate and that the closing process proceeds smoothly.