Three Things You Should Know About The Closing Disclosure

by | Sep 12, 2018 | Blog

When it’s time to close on your new home, it can feel like an all-out race to the finish line. So much paperwork. So many phone calls. So much planning and dreaming and potentially packing. In the midst of the excitement, a document arrives.

It’s called the closing disclosure.

With at least three days to go before your closing, chances are you’ve got a lot on your mind. Yet the arrival of this document is important, and it’s essential that you as a borrower take time to review it.


Here are three things you should know about the closing disclosure

1. This is your chance to make sure the details are correct

You’re about to take on the responsibility of a mortgage loan, and whether you’re a first-time homebuyer or this “ain’t your first rodeo” as they say, it’s essential to take time to review the closing disclosure. This five-page document spells out the terms of your loan and how much you’ll eventually pay in fees and other associated costs so that you can buy your home.

Why is this important? For so many reasons. First, you want to make certain the terms defined in the form are what you agreed to when you initially forged an agreement with your mortgage lender. You’ll want to double check all of the details, and get clarity on anything you don’t understand. Be sure to compare your closing disclosure with the loan estimate provided to you by your mortgage lender. And if you don’t understand something, or something seems wrong, reach out to your lender, an attorney or even your real estate agent so that you fully understand the terms of the agreement.


2. Didn’t get a closing disclosure? It might be your loan type

Some buyers won’t receive a closing disclosure. But don’t worry—it’s likely related to your loan type and you’ll receive something else.

If you’ve applied for a reverse mortgage, you’ll receive different forms to prepare you for closing. You’ll get a HUD-1 Settlement Statement as well as a Truth in Lending Disclosure.

If you’ve applied for a manufactured housing loan that is not secured by real estate, a HELOC, or a loan through certain homebuyer assistance programs, you should receive a Truth in Lending disclosure.

If you have not applied for any of these special loans, and you have not received your closing disclosure three days before closing, contact your lender immediately.


3. Your closing disclosure can answer a lot of questions

It’s natural to have questions as closing nears. Luckily, your closing disclosure is designed to clarify many of the financial questions you may have, so you can feel fully prepared by the time you’re at the closing table. Here are just a few terms the closing disclosure can clarify for you:

  • The interest rate of the loan
  • Your closing costs
  • How much you are borrowing
  • Whether you have a fixed-rate or adjustable rate mortgage
  • Your monthly payment
  • The full cost of the mortgage
  • Whether you are being charged points
  • How much money you should bring to closing

Be sure to clarify anything you don’t understand prior to closing.


The closing disclosure: an essential document in the home-buying process

The closing disclosure is one of many, seemingly countless documents that you’ll receive and manage during the process of buying your home. Keep in mind that it is essential to both understand and double check all of the terms of the loan disclosed in the document. When you do, you can rest assured you have a full understanding of the commitment you are making and the loan responsibility that comes with the pride of homeownership.