Which Document Must a Borrower Get 3 Days Before Closing?

Understanding the documents involved in a home loan can be overwhelming. Reviewing these papers before signing protects your financial interests and ensures informed decision-making, helping borrowers avoid misunderstandings or unexpected burdens.

The Closing Disclosure

The Closing Disclosure (CD) is a comprehensive document that outlines the final terms of a mortgage transaction. This five-page form provides a complete breakdown of the loan, including the interest rate, monthly payments, and total closing costs. Its primary purpose is to clearly present all financial aspects of the loan, so borrowers understand their obligations before finalizing the agreement.

This document consolidates information from the initial Loan Estimate, providing a detailed comparison of estimated versus actual costs. It includes figures for origination charges, appraisal fees, title insurance premiums, and other services. The CD also details the cash needed to close the transaction, accounting for the down payment, closing costs, and any credits. Lenders are responsible for providing this document to the borrower.

The Three-Day Review Period

Federal regulations mandate that borrowers receive the Closing Disclosure at least three business days before the scheduled loan signing. This requirement stems from the TILA-RESPA Integrated Disclosure (TRID) rule, implemented by the Consumer Financial Protection Bureau (CFPB). The rule ensures borrowers have sufficient time to review the mortgage loan terms without pressure.

This mandatory waiting period empowers borrowers to examine the final loan terms and compare them against the initial Loan Estimate. This time allows for identifying any discrepancies, understanding complex financial figures, and asking questions before committing to the loan. A “business day” for this rule includes all days except Sundays and federal holidays. The three-day clock starts the day after the borrower receives the Closing Disclosure.

What to Scrutinize in the Closing Disclosure

Careful examination of the Closing Disclosure is important. Begin by verifying that the loan amount, interest rate, and loan term precisely match what was agreed upon in your loan offer. Pay close attention to the monthly principal and interest payment, confirming it aligns with your expectations and financial planning. Any unexpected changes in these core terms warrant immediate inquiry.

Next, compare the closing costs on the CD with your initial Loan Estimate. Look for significant increases in fees like origination charges, appraisal fees, or title insurance. Understand the breakdown of all service provider costs, distinguishing between shoppable services and those required by the lender. Review escrow account details, confirming amounts collected for property taxes and homeowner’s insurance are accurate. Finally, verify the “Cash to Close” amount, ensuring it reflects all payments and credits received.

Borrower Actions Before Signing

Upon reviewing the Closing Disclosure, if any discrepancies are identified or questions arise, promptly contact your lender or loan officer. Clearly articulate unclear or incorrect items, referencing the section and line numbers on the document. It is helpful to have your initial Loan Estimate readily available for comparison during this discussion.

For any significant concerns or requested changes, it is advisable to obtain explanations or confirmations in writing. This creates a clear record of communication and agreed-upon adjustments. If necessary, engage your real estate agent or a legal professional to help interpret complex terms or advocate on your behalf. Resolving issues before the scheduled signing prevents delays and ensures you proceed with full confidence in the loan terms.

Impact of Changes on Your Closing

Certain material changes to the loan terms after the Closing Disclosure has been issued can trigger a new three-business-day waiting period. This regulatory safeguard provides borrowers with another opportunity to review the updated terms before proceeding. Examples of changes that necessitate a new waiting period include an increase in the Annual Percentage Rate (APR) by more than 0.125% for a fixed-rate loan or 0.25% for an adjustable-rate loan.

A change in the loan product, such as switching from a fixed-rate to an adjustable-rate mortgage, also triggers a new waiting period. The addition of a prepayment penalty to the loan terms, which was not previously disclosed, will similarly require a new three-day review. This rule helps protect borrowers from last-minute alterations to the loan agreement that could significantly impact their financial obligations.