When Do You Receive the Closing Disclosure?

The Closing Disclosure (CD) is a five-page document providing the finalized details of a mortgage loan. It outlines the loan terms, projected monthly payments, and all associated costs, including fees and other expenses. This document serves as a tool for transparency and consumer protection in the homebuying process. It ensures that borrowers have a clear understanding of their financial obligations before committing to a mortgage. The CD also allows borrowers to compare the final terms against earlier estimates, helping to prevent surprises at closing.

The Initial Delivery Timeline

Lenders are legally required to provide the Closing Disclosure to the borrower at least three business days before the scheduled closing date. This waiting period, often referred to as the “3-day rule,” gives borrowers time to review the document before finalizing the real estate transaction. The three-business-day clock typically starts once the borrower receives the CD.

The lender is responsible for providing the Closing Disclosure. Delivery can occur through various methods, including electronically via e-signature platforms or through traditional mail. For electronic delivery, the three-day period begins upon the borrower’s acknowledgment of receipt. If sent by mail, the “mailbox rule” applies, meaning the borrower receives the disclosure three business days after it is placed in the mail. Business days for this rule include Saturdays but exclude Sundays and federal holidays, potentially extending the actual calendar time a borrower has for review.

This waiting period allows borrowers to digest the financial information and address any questions or concerns. Even if a borrower reviews and signs the CD immediately, the closing cannot proceed until this three-business-day period has fully elapsed.

Events Requiring a New Disclosure

Certain changes to the loan terms after the initial Closing Disclosure has been provided necessitate a new CD and, consequently, trigger a new three-business-day waiting period before closing can occur. These changes warrant re-disclosure to protect the consumer from unexpected alterations to their loan agreement.

One such event is a change in the Annual Percentage Rate (APR) beyond a specified tolerance. For most fixed-rate loans, if the APR varies by more than one-eighth of a percentage point, or by more than one-quarter of a percentage point for irregular loans, a new CD is required. Another trigger for a re-disclosure and new waiting period is a change in the loan product itself, such as switching from a fixed-rate to an adjustable-rate mortgage. The addition of a prepayment penalty to the loan terms also mandates a new Closing Disclosure and a fresh three-day review period.

These re-disclosure requirements ensure borrowers are fully aware of any substantial modifications to their loan. Minor adjustments to other fees or costs might warrant a corrected CD, but they do not restart the waiting period unless they fall into one of these three categories.

Actions Upon Receipt

Upon receiving the Closing Disclosure, borrowers should immediately begin a thorough review of the document. The primary action is to compare the CD side-by-side with the last Loan Estimate (LE) that was provided. This comparison helps identify any discrepancies between the estimated costs and the final, confirmed figures.

Borrowers should verify all listed details, including the loan amount, interest rate, and projected monthly payments. It is important to verify that all closing costs, such as origination charges, appraisal fees, title fees, and prepaid items like property taxes and homeowner’s insurance, align with what was previously estimated. While some minor fluctuations are normal, significant increases in specific fees or the total cash to close should be questioned.

Also verify any credits from the seller or lender, ensuring they have been accurately applied. If an escrow account is being established for taxes and insurance, the initial deposit and projected monthly contributions should be reviewed for accuracy. Any item that is unclear, appears incorrect, or differs substantially from the Loan Estimate should prompt immediate communication with the lender or closing agent. Addressing these concerns before the scheduled closing date helps ensure a smooth and accurate transaction.