A Mortgage Closing Document That Homebuyers Need To Check Before Signing On The Dotted Line

You have found a house and after due diligence and planning, you are finally on your way to become a homeowner. However, the most time-consuming part before you close is the tons of paperwork that you need to review and sign. One such document that you will receive if you have chosen a conventional loan will be the Closing Disclosure (CD). This deserves your close attention as it provides one-stop access to all your mortgage details.

Though the Closing Disclosure is a standardized form with very clear language and layout, the terminology can be a bit baffling for first-time home buyers. Here is what it is, why it is important, and how to correct any errors.

A closing disclosure is a five-page document that is issued at least three days before you close on a home and lays down the final details about the loan you have selected. This standardized document gives you the most relevant details of your loan so that you understand what you are agreeing to before you arrive at the signing appointment. Your CD will include:

The Closing Disclosure is similar to the loan estimate that you received when you applied for your home loan. However, the Loan estimate only outlined the approximate costs of your mortgage whereas the Closing Disclosure gives you the actual numbers and is the final review of your loan. It is also referred to as Know Before You Owe. Take your time to comb through the details of your Closing Disclosure. You should understand what your closing costs and monthly payments are and if there will be any changes to the interest rates (like if you have an ARM). You should also ask questions about anything that you do not understand as you will be legally and financially bound by the terms and conditions until you close the mortgage, either by refinancing, selling your home, or paying it off entirely.

If you have missed out on reading our previous blog on the Loan Estimate click here.

Federal law requires that lenders give borrowers the closing disclosure at least three days before the closing date. According to the Consumer Financial Bureau “If you do not receive a closing disclosure you can request one from the lender immediately”. Also, you should not proceed with the closing until you have reviewed the document.

The idea here is that you have been given ample time to review the document and understand the terms and conditions of the mortgage you are getting.

When you receive your Closing Disclosure you need to compare it with your LD (loan estimate). Most of the details and numbers should be similar but can differ as it has been weeks or maybe even months since you applied for your mortgage. Take time to triple-check and ask questions about any issues you come across. The list of things that you need to check are:

Additionally, you need to check if there are any substantial changes in these key areas as they qualify for a new three-day review.

You can find a Closing Disclosure form explainer on the CFPB website to help you double-check for errors. If you find an error you should inform your lender and Title Company right away. Even a minor error like a typo can be significant. However, a major issue like an increase in the APR will lead to a revised document and can lead to a delay in your closing date.

Sign the Closing Document once you have fully understood the loan terms and conditions. By signing it you acknowledge that it is accurate.

The closing disclosure is an important document. As a consumer, you have a right to know what you are signing up for when you sign your mortgage and the closing disclosure ensures just that. If you have more queries about Closing Disclosures or anything related to the mortgage process reach out to ratebeat mortgage. One of our professionals will answer all your questions and ensure that your closing goes smoothly.