What is a Closing Disclosure?
The lender is required to give the buyer what is known as a
Closing Disclosure at least three business days before you close
on the mortgage loan. It is important that the buyer receives this
at least three days prior to closing, NOT counting the day of
closing, or the buyer will not be able to close as planned. The
purpose of this disclosure is to allow the buyer time to review the
line items on the final disclosure and compare those costs to the
terms and costs of the Loan Estimate that was initially provided
by the lender. The three days also allow time to ask the lender
any questions before closing.
Although the Loan Estimate outlined the approximate fees you
would pay for your mortgage, the Closing Disclosure Form uses
the actual numbers. This is why you must read it carefully and ask
about anything you don’t understand.
Let’s look at an overview of the main components of the Loan
Disclosure. Loan Term is the terms of your mortgage, including
the loan amount, interest rate, monthly principal, and payment.
Payments is another component that includes: payment
calculation, monthly payment estimation, and taxes. Loan Costs
consist of the origination fee, mortgage points (if applicable), the
application fee, and the underwriting fee. Some fees are for required
services the lender chose such as the appraisal fee and credit
report. The buyer can also shop for services (i.e. title insurance).
There are other costs involved such as recording the deed,
prepaid (property taxes), and other specific line items unique to
your situation that can be discussed with the lender if there are
Remember, the Loan Disclosure indicates the final numbers of the
loan, so look through it thoroughly and make sure you are
comfortable with all the line items and the costs represented on
the disclosure. Once you sign it, you are agreeing to all the final
Source: Victoria Araj/Rocket Mortgage