Closing Disclosure: What the Form Is, How It Works

The Closing Disclosure is a five-page form summarizing the interest rate, fees and closing costs on your mortgage.
Holden Lewis
Hal M. Bundrick, CFP®
By Hal M. Bundrick, CFP® and  Holden Lewis 
Edited by Johanna Arnone

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The Closing Disclosure is the final document you'll see in the mortgage loan process just before that massive pile of paperwork you'll face at closing. Here's what the five-page document is and how to use it.

What is a Closing Disclosure?

The Closing Disclosure is a final accounting of your loan's interest rate and fees, mortgage closing costs, your monthly mortgage payment and the grand total of all payments and finance charges. The form is issued at least three days before you sign the mortgage documents.

You will want to compare the Closing Disclosure with the most recent Loan Estimate from your lender, to see if anything substantial has changed.

You can close three days after you get the Closing Disclosure

The lender is required to provide the Closing Disclosure at least three business days before the scheduled closing. This gives you time to spot any discrepancy in the terms or details of the loan, compared with what was on the Loan Estimate. Contact the lender or settlement agent within three business days if the Closing Disclosure contains anything unexpected.

The Closing Disclosure is a five-page document that lists details of the mortgage, including interest rate and fees.

Three changes can trigger the issuance of a revised Closing Disclosure and a new three-day waiting period:

  1. A change in the annual percentage rate — the APR — for your loan.

  2. A prepayment penalty is added to your loan, though this fee is rare nowadays.

  3. Switching your loan product; for example, moving from a fixed to an adjustable-rate mortgage.

You can waive your right to a three-day waiting period only if you have a "bona fide personal financial emergency," the Consumer Financial Protection Bureau says. You'll need to provide a dated and signed written statement to the lender or closing agent describing the urgent matter.

A sample Closing Disclosure form

The CFPB regulates the mortgage lending industry and provides a sample Closing Disclosure form. Each sample page highlights particular items that you should check for accuracy.

Costs that can change after you sign a Closing Disclosure

It's uncommon but not impossible for closing costs to change after a Closing Disclosure is signed. For example, if you haven't locked your mortgage rate, it may rise or fall before closing.

It's more common that some things might have changed in the time between your receiving the Loan Estimate and getting the Closing Disclosure.

You might see differences in the amount of prepaid interest, homeowners insurance premiums, recording fees or third-party charges. These aren't controlled by the lender and can vary.

Costs that cannot change after you sign a Closing Disclosure

After you sign the Closing Disclosure, no change is allowed in lender or broker fees, transfer taxes or other fees that you were not allowed to shop for.

Don't let anyone pressure you into rushing through the Closing Disclosure. You are well within your rights to take a breath and read and reread the documents.

And ask as many questions as it takes to understand what you're signing.

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