It’s the last document you’ll receive before you close on your home-and it’s also one of the most important. We’re here to answer some of the most commonly asked questions about Closing Disclosures.
What is a Closing Disclosure?
A simple way to think about your Closing Disclosure is that your Loan Estimate tells you what you might pay, while a Closing Disclosure tells you what you will pay. This document is the final bill of sale on your home loan and closing costs. It shows you the full cost of the home loan you’ve chosen-including the terms, projected monthly payments, fees, and cash to close.
You’ll want to compare your Closing Disclosure to your Loan Estimate to see if there are any discrepancies. Luckily, the Consumer Finance Protection Bureau (CFPB) requires lenders to provide your initial Closing Disclosure at least 3 business days before you close. The CFPB also requires that this document be standardized, itemized, and easy to read-there’s even a section that will show you exactly what has changed between receiving your Loan Estimate and receiving your Closing Disclosure. If you have any questions or final changes you’d like to make, you can use the 3-day grace period to call your lender and have those made. No adjustment is too small- even if your lender misspells your name or printed a typo on your address, you’ll want to have that corrected before closing. They’ll send you a revised Closing Disclosure, which you should check again. Then you’ll receive your final Closing Disclosure, which you’ll sign as part of the closing process.
- If your loan terms change after receiving your initial Closing Disclosure and APR increases more than 1/8th of a percent. That’s why it’s important to lock in your rate and make any changes prior to entering closing.
- If your lender decides to add a prepayment penalty to your terms. These are growing increasingly uncommon, but you should still keep an eye out for it.
- If you decided to go with a different loan product. This is essentially like “going back to start” and requires a bit of a backtrack.
What are the key dates on my initial Closing Disclosure?
Date issued: Sounds pretty self explanatory-this is the date the initial Closing Disclosure is provided to you. But there’s a bit of a catch-your “date issued” is assumed to be the “date received.” Pro tip: you should acknowledge your initial Closing Disclosure on your Better Mortgage account on the same date that you receive it in order to move into the rest of the closing process as soon as possible.
Closing date: If you’re purchasing a new home, this date will be the same as your “Close of Escrow.” However, in Alaska, Arizona, California, Hawaii, Idaho, Nevada, New Mexico, Oregon, and Washington, you are generally allowed to sign your closing documents prior to this date. If you’re refinancing your home, there’s no need for a transfer of ownership, and there are far fewer parties involved. 3 business days after you receive and acknowledge your initial disclosure, you’ll be ready and expected to sign your final Closing Disclosure.
First: this is the date your loan will fund-which is generally the same day the title company will “disburse” your transaction. That’s a lender term for “paying all the people you promised to pay.”-including the seller, appraisers, cash-back payments for yourself, and more. If you’re buying a home, your disbursement date is considered your “close of escrow” date. On the other hand, for primary refinances, your disbursement date is the day after your recission period ends-or 4 days after you’ve signed your closing package. For refinances of second homes or investment properties, this date is 2-3 days after you’ve signed the closing package.