When Should I Receive the Closing Disclosure Statement?

The Closing Disclosure (CD) is an important document in real estate transactions, providing final details about your mortgage loan terms and associated closing costs. It ensures consumer understanding and protection during the complex process of buying a home or refinancing. This document offers a clear summary of financial commitments, allowing borrowers to review and understand their loan before finalizing the agreement.

Understanding the Closing Disclosure

The Closing Disclosure is a standardized, five-page form that outlines the final terms of your mortgage loan. It replaced the HUD-1 Settlement Statement and the final Truth-in-Lending Disclosure for most transactions after October 3, 2015, consolidating information into a single, comprehensive statement.

The CD provides detailed information, including the final loan terms, projected monthly payments, and an itemized breakdown of all closing costs. It also specifies the cash required to close and summarizes transaction details for both the borrower and the seller. This structured presentation allows borrowers to compare the final terms against the initial Loan Estimate they received, identifying any significant changes.

The 3-Day Rule for Receipt

An important aspect of the mortgage process is the mandatory three-business-day waiting period before your loan can close, known as the “3-day rule.” Lenders are required to ensure you receive the Closing Disclosure at least three business days prior to the loan’s consummation, which is typically when you become legally obligated on the mortgage. This waiting period grants you sufficient time to review the document thoroughly and raise any questions.

For the purpose of the Closing Disclosure, a “business day” is defined as all calendar days except Sundays and federal public holidays. For example, if you receive the CD on a Monday, and there are no holidays, your closing could occur on Friday. The clock for this three-day period begins ticking on the day you receive the CD, not the day after. Receipt can be confirmed through electronic delivery with your consent, or by signing the final page of the form.

Certain changes to the loan terms after the initial CD has been issued trigger a new three-business-day waiting period and re-disclosure. This ensures you have time to understand significant modifications. Such changes include if the Annual Percentage Rate (APR) increases by more than 0.125% for a regular loan, if the loan product changes (e.g., from fixed-rate to adjustable-rate mortgage), or if a prepayment penalty is added to the loan.

However, not all changes necessitate a new waiting period. Minor adjustments to closing costs that remain within regulatory tolerances or clerical errors do not trigger a re-disclosure and a new waiting period. Additionally, if the APR decreases, a new three-day waiting period is not required, though a corrected CD will still be provided.

Reviewing Your Closing Disclosure

Upon receiving your Closing Disclosure, it is important to review each page for accuracy and consistency. A primary step is to compare the final terms on the CD with your most recent Loan Estimate. This comparison helps identify any discrepancies or unexpected changes.

Key Items to Review:

Verify that the loan terms, such as the interest rate, loan amount, and loan type, precisely match what you agreed upon.
Examine all itemized closing costs to confirm they are accurate and align with previous estimates or negotiated figures.
Pay close attention to the “Cash to Close” amount to ensure it reflects your understanding of the funds needed at settlement.
Review the loan disclosures, which cover details like escrow account setup, assumption policies, late payment fees, and any applicable prepayment penalties.
Confirm that your personal information, such as your name and property address, is correctly spelled and listed.

What to Do if There are Issues

If you identify any discrepancies, errors, or unexpected charges while reviewing your Closing Disclosure, act promptly. Immediately contact your lender or settlement agent for clarification and resolution. They can explain any differences or correct any inaccuracies found on the document.

In cases where significant changes are necessary, such as those that trigger a new three-day waiting period, your closing timeline will be extended. Do not feel pressured to sign the document until all your questions have been satisfactorily answered and you fully comprehend all the terms and costs involved in your mortgage transaction.