If you’re buying or refinancing a home, you’ll encounter a Closing Disclosure form. This critical document outlines the final details of your mortgage loan. Understanding this form is important; no one wants a surprise on closing day!

What is a Closing Disclosure Form?

A closing disclosure is a document provided by your lender at least three business days before closing. It summarizes the terms of your loan, including loan amount, interest rate, monthly payment breakdown, closing costs and fees, and escrow details. This is your chance to compare the final terms of your loan with those from your initial loan estimate to ensure everything aligns with your expectations. If there have been changes, now is your time to review and address them.

How Do I Review a Closing Disclosure?

First, look for any discrepancies between the Loan Estimate and the Closing Disclosure. Some small variations in costs are normal since a certain amount of time has passed between the two, but significant changes should be clarified with your lender. Review the numbers and conditions thoroughly. Errors in fees, interest rates, or loan amounts can lead to complications down the road. If anything is unclear, speak with your lender or real estate agent immediately. The three day review period is your chance to resolve your concerns before you’re sitting at the closing table.

What Terms Should I Know?

• Loan terms: This confirms the loan amount, interest rate, monthly principal payment, and monthly interest payment.
• Projected payments: This provides a breakdown of how your monthly payments may change over time, taking into account taxes and insurance. This is especially important to know if you have an adjustable rate mortgage!
• Costs at closing: This lists your total closing costs, including the amount you need to bring to the table. Cost may include fees for title insurance, the appraisal, and loan origination.
• Cash to close: This details how much cash you’ll need to pay at closing, including down payments and credits.