slug: closing-disclosure-guide

Closing Disclosure Guide: What to Review Before Signing Your Mortgage

The Closing Disclosure (CD) is the most important document you'll review before closing on your mortgage. This five-page form contains the final, binding terms of your loan and the exact costs you'll pay at closing. Unlike the Loan Estimate, which contains estimates, the Closing Disclosure reflects actual, final numbers.

Federal law requires you receive your Closing Disclosure at least three business days before closing. This mandatory waiting period gives you time to review, compare to your Loan Estimate, identify any errors or unexpected changes, and ask questions—before you're sitting at the closing table with a pen in hand.

Understanding how to review your Closing Disclosure thoroughly can save you thousands of dollars and prevent costly mistakes. This comprehensive guide walks through every page, explains what to look for, and shows you how to spot and address issues before it's too late.

What Is the Closing Disclosure?

The Closing Disclosure is a standardized five-page form that provides:

• Final loan terms and monthly payment details
• Complete breakdown of all closing costs
• Transaction details (who pays what)
• Summaries and comparisons
• Contact information for all parties

Key characteristics:

• Must be provided at least 3 business days before closing
• Contains final, binding numbers (not estimates)
• Required by TILA-RESPA Integrated Disclosure (TRID) rule
• Certain changes trigger a new 3-day waiting period
• Replaces the old HUD-1 Settlement Statement and final Truth in Lending disclosure

Three-Day Rule: You have the right to a full three business days to review before closing. Saturdays count as business days; Sundays and federal holidays don't. If you receive the CD on Monday, the earliest you can close is Thursday.

Why the Closing Disclosure Matters

The Closing Disclosure is critical because:

1. It's final: These numbers determine what you pay and your legal obligations

2. It's binding: Once you sign, you've agreed to these terms

3. Errors happen: Mistakes in the CD can cost you thousands

4. Changes occur: Comparing to your Loan Estimate reveals unexpected changes

5. It's your last chance: This is your final opportunity to catch problems before closing

Real-world impact: Borrowers who carefully review their CD commonly discover:

• Incorrect interest rates
• Missing seller credits
• Excessive or incorrect fees
• Wrong loan amounts
• Property tax calculation errors
• Missing homeowner's insurance

The Five-Page Breakdown

Page 1: Loan Terms, Projected Payments, and Costs at Closing

Page 1 mirrors the Loan Estimate format but with final numbers.

Closing Information

Top section includes:

• Closing date
• Disbursement date (when funds are released)
• Settlement agent (title company or attorney)
• File number
• Property address
• Sale price
• Loan amount

What to verify:

• Closing date matches your expectations
• Property address is correct
• Sale price matches purchase agreement
• Loan amount is correct

Loan Terms

Loan Amount: Final amount you're borrowing—should match your purchase price minus down payment, or your refinance amount.

Interest Rate: Your locked rate. Verify this matches your rate lock confirmation.

Monthly Principal & Interest: Your base payment amount (before taxes, insurance, HOA).

[Prepayment Penalty](/blog/dscr-loan-prepayment-penalty): Should show "NO" for most modern mortgages.

Balloon Payment: Should show "NO" unless you specifically chose a balloon loan.

Example verification:

Rate lock confirmation: 4.125%
Closing Disclosure: 4.125% ✓

If these don't match, STOP and contact your lender immediately.

Projected Payments

Shows your complete monthly payment broken into periods:

Principal & Interest: Never changes for fixed-rate; shows range for ARM

Mortgage Insurance: Monthly MI amount if applicable; shows when it drops off

Estimated Escrow: Taxes, insurance, HOA fees

Estimated Total Monthly Payment: What you'll actually pay

Compare to Loan Estimate:

• Did the projected payment increase?
• Are the components (P&I, MI, escrow) what you expected?
• Do you understand any changes?

Costs at Closing

Closing Costs: Total of all fees (detailed on page 2)

Cash to Close: The check you need to bring to closing

Critical verification:

• Do you have this amount available?
• Is it close to the Loan Estimate?
• Do you understand any significant changes?

Page 2: Closing Cost Details

Page 2 is the most detailed section—every fee is itemized here. This is where you'll spend the most time during review.

Borrower-Paid vs. Seller-Paid

Each line item shows who pays: Borrower, Seller, or split between both. Watch carefully:

At Closing: Amounts paid at the closing table

Before Closing: Amounts already paid (like appraisal at application)

Paid by Others: Amounts someone else is paying on your behalf

Loan Costs (Section A-D)

Section A: Origination Charges

Every lender fee is listed:

• Points ([discount points](/blog/mortgage-points-explained))
• Origination fee
• Application fee
• Underwriting fee
• Processing fee

Compare to Loan Estimate: These fees CANNOT increase from the LE. If they have, the lender must credit you the difference.

Red flags:

• New fees not on the LE
• Fees higher than the LE
• Duplicate fees (two underwriting fees, for example)

Section B: Services Borrower Did Not Shop For

Services required by lender where you couldn't choose the provider:

• Appraisal
• Credit report
• Flood certification
• Tax monitoring

Compare to Loan Estimate: These fees CANNOT increase from the LE (zero tolerance).

Section C: Services Borrower Did Shop For

Services where you could choose the provider:

• Title insurance
• Survey
• Attorney/settlement fees
• Pest inspection

Compare to Loan Estimate:

• If you used lender's recommended provider: cannot increase more than 10% cumulatively
• If you selected your own provider: can change without limit

Section D: Total Loan Costs

Sum of A + B + C

Other Costs (Section E-H)

Section E: Taxes and Other Government Fees

• Recording fees
• Transfer taxes
• Deed stamps (state-dependent)

Compare to Loan Estimate: These CANNOT increase—they're set by government.

Section F: Prepaids

Amounts paid in advance:

• Homeowner's insurance premium (first year)
• Mortgage insurance premium (upfront, if applicable)
• Prepaid interest (from closing to end of month)
• Property taxes (if due soon)

Can change from LE because:

• Closing date changed (affects prepaid interest)
• Insurance quote changed
• Property taxes were updated

Section G: Initial Escrow Payment at Closing

Money deposited to start your escrow account:

• Homeowner's insurance (typically 2 months)
• Mortgage insurance (typically 2 months)
• Property taxes (typically 2-4 months)
• HOA fees (if applicable)

Note the cushion: Lenders maintain a buffer (typically 2 months of expenses) in your escrow account.

Section H: Other

• HOA fees due at closing
• Home warranty
• Owner's title insurance (if you're purchasing)
• Home inspection (usually paid before closing)

Section I: Total Other Costs

Sum of E + F + G + H

Section J: Total Closing Costs

Grand total of all costs (D + I)

Minus any lender credits = Final closing costs

Calculating Cash to Close

Bottom of page 2 shows the calculation:

Total Closing Costs: $12,150
Down Payment/Funds from Borrower: $100,000
Deposit/[Earnest Money](/blog/earnest-money-explained): -$10,000
Funds for Borrower: $0
Seller Credits: -$5,000
Adjustments and Other Credits: -$500
Cash to Close: $96,650

Verify every line:

• Total closing costs match Section J
• Down payment is correct percentage
• Earnest money credit appears
• Seller credits match purchase agreement
• Final number is what you're prepared to pay

Page 3: Cash to Close and Summaries

Page 3 helps you compare your final costs to what you expected.

Closing Cost Summary

Shows total closing costs broken down by:

• Borrower-paid at closing
• Borrower-paid before closing
• Seller-paid
• Paid by others

Example:

Total Closing Costs: $12,150
Borrower-paid at closing: $8,500
Borrower-paid before closing: $650 (appraisal)
Seller-paid: $3,000
Paid by others: $0

Cash to Close Summary

Compares Loan Estimate to Final Closing Disclosure:

Shows:

• Loan amount (any change)
• Total closing costs (any change)
• Down payment (any change)
• Deposit/earnest money
• Seller credits
• Adjustments
• Cash to close from LE vs. CD

Example:

                    Loan Estimate    Final    Change
Loan Amount         $400,000         $400,000    $0
Closing Costs       $12,000          $12,150   +$150
Down Payment        $100,000         $100,000    $0
Deposit             -$10,000         -$10,000    $0
Seller Credits      -$5,000          -$5,000     $0
Cash to Close       $97,000          $97,150   +$150

Analyze changes: Small changes are normal. Large changes require explanation.

Summaries of Transactions

Detailed accounting of all money in the transaction.

Borrower's Transaction:

• What you're paying for: property price, closing costs
• What you're being credited: earnest money, seller credits
• Calculation of cash from/to borrower

Seller's Transaction:

• What seller receives: sale price
• What seller pays: payoff of existing loan, seller-paid closing costs, real estate commissions
• Calculation of cash from/to seller

Why this matters: Ensures both sides of the transaction balance correctly.

Page 4: Additional Information

Page 4 provides required disclosures and important loan details.

Loan Disclosures

Appraisal: Confirms you have right to receive a copy of appraisal (you're entitled to this even if you paid for it).

Contract Details: Brief statement about your purchase contract and whose responsibility it is.

Liability After Foreclosure: For some states, confirms whether you could still owe money after foreclosure. Important state-specific information.

Refinance: If applicable, notes this is a refinance and describes what that means for loan terms.

Tax Deductions: Reminder to consult tax advisor about deductibility of interest and charges.

Loan Calculations

Shows how key loan numbers were calculated:

Total of Payments: Every monthly payment added up over life of loan

• Includes principal, interest, and mortgage insurance
• Does NOT include escrow (taxes/insurance)

Example for $400,000 at 4% over 30 years:

Total of Payments: $687,478
(360 payments of $1,910 = $687,600, approximately)

Finance Charge: Total interest and certain fees you'll pay over the loan life

Example:

Finance Charge: $292,478
(Total of payments minus loan amount: $687,478 - $400,000 = $287,478, plus certain fees)

Amount Financed: The actual amount of credit provided to you

Annual Percentage Rate (APR): Cost of loan as yearly rate, including fees

Total Interest Percentage (TIP): Total interest as percentage of loan amount

Example:

Loan amount: $400,000
Total interest: $287,478
TIP: 71.87%

Other Disclosures

Appraisal Method: How the property was valued (full appraisal, drive-by, automated valuation)

Assumption: Can your loan be transferred to a buyer?

Demand Feature: Can lender demand full payment before loan matures? (Rare; usually "no")

Escrow Account: Detailed explanation of your escrow account

Homeowner's Insurance: Required amount and that you must maintain it

Late Payment: Late fee amount and grace period (typically 15 days)

Partial Payments: Whether lender accepts payments less than full monthly amount

Security Interest: Confirms the property secures the loan (lender can foreclose if you don't pay)

Servicing: Who will service your loan and whether it can be transferred

Page 5: Loan Calculations and Contact Information

Page 5 provides additional context and contact details.

Loan Calculations (Continued)

Escrow Property Costs Over Year 1: Itemized annual costs paid from escrow:

• Property taxes: $X
• Homeowner's insurance: $X
• HOA fees (if applicable): $X
• Total: $X

Example:

Property Taxes: $3,600
Homeowner's Insurance: $1,200
Total: $4,800 annually ($400/month)

Adjustable Payment (AP) Table

For ARMs only—shows how payments could change:

Details:

• When rate first adjusts
• How often rate adjusts after that
• Rate caps (max increase per adjustment and lifetime)
• Maximum monthly payment

Example for [5/1 ARM](/blog/arm-vs-fixed-rate-mortgage):

First adjustment: After 5 years
Adjustments after that: Every year
Maximum rate increase: First: 2%, After: 2%
Maximum rate: 9.125%
Maximum monthly payment: $3,259

Adjustable Interest Rate (AIR) Table

For ARMs—shows how the rate is calculated:

Details:

• Index used (SOFR, CMT, etc.)
• Margin added to index
• Minimum and maximum interest rates
• How rate affects payment

Contact Information

Lists everyone involved:

Lender: Name, NMLS ID, contact info

Mortgage Broker: If applicable

Real Estate Broker (Buyer and Seller): Name and contact info

Settlement Agent: Title company or attorney conducting closing

Confirm Receipt

Signature line acknowledging receipt (not required but lender may request).

Comparing Closing Disclosure to Loan Estimate

The most important review task is comparing your CD to your LE to identify changes.

Use a Checklist

Create a simple comparison:

Loan Terms:

• Interest rate unchanged
• Loan amount unchanged
• Monthly payment as expected

Closing Costs - Section A (Origination):

• No increases (zero tolerance)
• No new fees added

Closing Costs - Section B (Cannot Shop):

• No increases (zero tolerance)

Closing Costs - Section C (Can Shop):

• If used lender's providers: increases ≤10% cumulative
• If chose own providers: understand any changes

Closing Costs - Section E (Taxes/Govt):

• No increases (zero tolerance)

Seller Credits:

• Match purchase agreement

Cash to Close:

• Within expected range
• Have funds available

Allowable vs. Problematic Changes

Allowable changes:

• Prepaid interest (closing date changed)
• Per-diem charges (due to timing)
• Title insurance (if you chose your own provider)
• Property taxes (updated info)
• Homeowner's insurance (rate changed)

Problematic changes:

• Higher interest rate than locked
• Increased lender fees
• Missing seller credits
• Higher appraisal or credit report fees
• New fees not disclosed on LE

What to Do If You Find Problems

Minor issues:

• Contact your loan officer immediately
• Request explanation in writing
• Verify correction before closing

Major issues:

• Demand corrected CD
• Consider delaying closing if necessary
• Consult [real estate attorney](/blog/how-to-build-real-estate-team) if needed
• File complaint with CFPB if lender is unresponsive

Your rights: You can refuse to close if the CD contains errors or unacceptable changes. The three-day waiting period protects you—use it.

Changes That Trigger a New 3-Day Waiting Period

Certain changes to the CD after it's issued require restarting the 3-day clock:

Triggering changes:

1. APR increases more than 0.125% for most loans (0.25% for irregular transactions)
2. Loan product changes (switching from fixed to ARM, for example)
3. Prepayment penalty is added

Non-triggering changes:

• Most other fee changes
• Closing cost increases (if within tolerance)
• Escrow account changes
• Seller credit changes

Important: If any of the three triggering changes occur, you must receive a corrected CD and wait another 3 business days before closing.

Special Situations

Cash-Out Refinances

Special considerations:

• Shows cash you'll receive at closing
• Includes payoff of existing mortgage
• May show debt consolidation if applicable

FHA Loans

Additional disclosures:

• Upfront mortgage insurance premium
• Annual mortgage insurance premium
• Special FHA seller contribution rules

VA Loans

Unique features:

• VA funding fee shown
• Certain fees cannot be charged to veteran
• Specific VA disclosure language

HELOCs

HELOCs may use different disclosure forms:

• Different format than standard CD
• Variable rate disclosures
• Draw period and repayment period explained

At HonestCasa, our HELOC disclosures clearly explain all terms, rates, fees, and payment scenarios.

Investment Properties ([DSCR Loans](/blog/best-dscr-lenders-2026))

May show:

• Higher interest rates than owner-occupied
• Different insurance requirements
• No occupancy representations

Red Flags on Your Closing Disclosure

Watch for these warning signs:

Interest Rate Doesn't Match Rate Lock

Red flag: CD shows 4.5%, your rate lock shows 4.25%

Action: DO NOT CLOSE. Demand correction immediately.

Missing Seller Credits

Red flag: Purchase agreement shows $5,000 seller credit; CD shows $0

Action: Verify with real estate agent and lender. Demand correction.

Lender Fees Increased from LE

Red flag: LE showed $2,000 origination fee; CD shows $2,500

Action: This violates zero tolerance rules. Demand lender credit for the difference.

Excessive Escrow Cushion

Red flag: Escrow deposits seem extremely high

Action: Ask for detailed explanation. Escrow cushions are limited by law.

Unknown or Unexplained Fees

Red flag: "Administrative fee" or other vague charges appear on CD but not LE

Action: Demand explanation. If not justified, request removal.

Final Review Checklist

Before closing day, verify:

Loan Details:

• Correct interest rate
• Correct loan amount
• Correct property address
• Correct loan term (15-year, 30-year, etc.)

Monthly Payment:

• Can comfortably afford
• Understand all components
• Know when/if it will change

Closing Costs:

• Compare to Loan Estimate
• All increases explained and acceptable
• No unexpected fees

Seller Credits:

• Match purchase agreement
• Properly applied

Cash to Close:

• Know exact amount needed
• Have funds available (certified check or wire)
• Understand what it includes

Escrow:

• Understand escrow components
• Know monthly escrow payment
• Comfortable with reserves

Signatures:

• All pages present
• All numbers correct
• All parties identified correctly

What to Bring to Closing

After reviewing your CD, prepare:

Required items:

• Government-issued photo ID
• Proof of homeowner's insurance
• Cashier's check or wire confirmation for cash to close
• Copy of the Closing Disclosure
• Copy of the Loan Estimate
• Copy of purchase agreement
• Any other documents your closing agent requested

Helpful items:

• Calculator
• Questions list
• Contact info for your loan officer
• Pen (though closing agent usually provides)

At the Closing Table

Before signing:

• Verify the CD you're signing matches the one you reviewed
• Check that no last-minute changes were made
• Ask about anything you don't understand
• Don't feel pressured to sign if something is wrong

After signing:

• Request copies of everything
• Understand when you receive keys
• Know when first mortgage payment is due
• Keep all closing documents permanently

Post-Closing

Save your Closing Disclosure: This is a critical permanent record. You'll need it for:

• Tax purposes (interest deduction)
• Refinancing
• Home sale
• Verifying payment history
• Resolving disputes

Compare first mortgage statement: Verify your first bill matches the CD terms.

Conclusion

The Closing Disclosure is your financial roadmap for one of the largest transactions of your life. Taking time to review it thoroughly—comparing to your Loan Estimate, verifying every number, and asking about discrepancies—protects you from costly errors and ensures you're signing for exactly what you agreed to.

Key best practices:

1. Review immediately when received—don't wait until closing day
2. Compare to Loan Estimate line by line
3. Ask questions about anything unclear or changed
4. Verify cash to close and ensure funds are available
5. Don't sign if something is wrong—you have the right to delay closing
6. Keep permanently for your records

At HonestCasa, we walk our borrowers through the Closing Disclosure during a pre-closing call, answer all questions, and ensure complete understanding before closing day. Whether you're closing on a traditional mortgage, HELOC, or [DSCR loan](/blog/dscr-loan-guide), you deserve clarity and confidence in your final loan terms.

Your Closing Disclosure represents your commitment and the lender's commitment. Review it carefully, understand it completely, and close with confidence knowing exactly what you're agreeing to.

Related Articles

• Loan Estimate Explained
• Closing Costs Guide for First-Time Buyers: Every Fee Explained and How to Reduce Them
• [Heloc Closing Costs Guide](/blog/heloc-closing-costs-guide)
• Interest Rate Vs Apr Explained
• [Mortgage Closing Costs Breakdown](/blog/mortgage-closing-costs-breakdown)