The Closing Disclosure outlines final loan terms and costs, serving as your last chance to review everything before signing. Understanding this document is critical, especially in the key steps between Clear to Close and closing day—when you verify loan details, confirm cash to close, and catch last-minute changes. Reviewing it carefully ensures you’re not surprised at the closing table and helps prevent costly mistakes or delays.
What Is a Closing Disclosure?
The Closing Disclosure is a federally required five-page document provided by your mortgage lender at least three business days before closing. It outlines the final details of your home loan—including loan terms, monthly payments, fees, and closing costs.
Purpose: It gives you time to review, compare with your Loan Estimate, ask questions, and resolve discrepancies before signing.
Key Takeaways:
- Replaces the old HUD-1 form (for most residential loans)
- Gives a clear, standardized summary of the mortgage terms
- Is legally binding once signed—so reviewing it carefully is essential
What’s the Difference Between the Loan Estimate and the Closing Disclosure?
| Feature | Loan Estimate (LE) | Closing Disclosure (CD) |
| When You Receive It | Within 3 days of application | At least 3 business days before closing |
| Purpose | Preliminary loan terms & estimates | Finalized terms & costs |
| Can it change? | Yes | Only in limited circumstances |
Your job is to compare the CD to the LE and flag any significant changes.
What to Check on Your Closing Disclosure (Page-by-Page Breakdown)
Here’s a detailed walkthrough of each section—and what you need to verify.
Page 1: Loan Terms and Summary
Loan Terms
Includes:
- Loan Amount
- Interest Rate
- Monthly Principal & Interest
- Prepayment Penalty (if any)
- Balloon Payment
What to do:
Confirm loan amount and rate match your Loan Estimate
Check for any balloon payment or early payoff penalty
Look for any last-minute changes in interest rate or fees
Projected Payments
Breaks down monthly payments over time, including:
- Principal & Interest
- Estimated taxes and insurance
- PMI (Private Mortgage Insurance), if applicable
What to do:
Verify escrow is set up for taxes and insurance
Understand how long you’ll pay PMI (if required)
Confirm if your monthly payment changes in future years
Costs at Closing
Summarizes:
- Total closing costs
- Cash to close (how much you need to bring)
We’ll dig into these in Pages 2 and 3.
Page 2: Closing Cost Details
Loan Costs
- Origination charges
- Underwriting and processing fees
- Points (if any)
What to do:
Confirm you aren’t paying for unwanted points
✔️ Ensure no junk fees (e.g., excessive “processing fees”)
Other Costs
- Taxes
- Prepaid insurance
- Recording fees
- Title services
If any costs increase more than 10%, your lender may be violating tolerance rules. Ask for clarification or corrections.
Page 3: Cash to Close Breakdown
Breaks down how the final cash to close number was calculated, including:
- Down payment
- Closing costs
- Seller credits
- Deposits already paid
What to do:
Confirm all seller and lender credits are reflected
Check for duplicate charges or missing deposits
Make sure the amount aligns with what you planned to wire
Page 4: Loan Disclosures
Details specific terms and legal disclosures, such as:
- Late payment policies
- Escrow account status
- Whether the loan is assumable
- If your lender will sell or service the loan
What to do:
Understand what happens if you miss a payment
Confirm escrow requirements for taxes and insurance
Review whether your loan can be transferred or sold
Page 5: Final Details and Contacts
Includes:
- Total amount financed and APR
- Finance charges over the loan term
- Contact info for your lender, closing agent, and realtor
What to do:
Double-check APR vs. interest rate—it reflects real loan costs
Make sure all professionals listed are correct and familiar
Have all final disclosures been received and acknowledged?
Final Thoughts:
The Closing Disclosure isn’t just paperwork—it’s your last safeguard. Understanding it empowers you to catch mistakes, avoid hidden costs, and walk into your home with confidence and clarity.