You’re almost at the finish line of buying your home, and then your lender sends you a document called the Closing Disclosure. So, what exactly is it, and why does it matter? This document lays out all the final details of your mortgage, including your loan terms, closing costs, and how much cash you need to bring to closing. It’s one of the most important documents you’ll review before getting the keys to your new home, so let’s break down what you need to know.
A Closing Disclosure, often called a CD, is a five-page document that spells out the final terms of your mortgage loan. It includes key details like your loan amount, interest rate, monthly payment, and a breakdown of all closing costs. It also outlines the total amount you’ll need to pay at closing and gives a snapshot of your long-term costs, including how much you’ll pay in interest over the life of the loan.
Federal law requires lenders to provide this document at least three business days before your closing date. This gives you time to review everything carefully and ask questions if anything looks off.
The Closing Disclosure is your last chance to review your loan details before signing. Checking it thoroughly can help you avoid unexpected costs, ensure your loan terms are correct, and catch any mistakes before it’s too late. If something doesn’t match what you were originally told, this is the time to address it.
When you receive your Closing Disclosure, here are the key sections to focus on:
Loan Terms
Compare the loan amount, interest rate, and monthly payment with what you were originally offered. If your interest rate or loan type is different from what you expected, call your lender immediately.
Closing Costs and Cash to Close
This section outlines all the costs associated with your loan, including lender fees, title services, escrow fees, and prepaid expenses like property taxes and homeowners insurance. Compare these amounts to your Loan Estimate to ensure nothing unexpected has been added.
Loan Disclosures
Check for important details like whether your loan has a prepayment penalty, whether an escrow account is required, and whether you’ll face any balloon payments down the road. These terms can impact how flexible your loan is in the future.
Total Loan Costs Over Time
The Closing Disclosure includes a section showing the total cost of your mortgage over five, ten, and thirty years, including principal, interest, and fees. Reviewing these numbers can give you a better sense of the long-term financial commitment.
Mistakes on a Closing Disclosure can cause delays, so it’s important to flag anything that doesn’t look right as soon as possible. Some common issues include math errors, unexpected charges, and discrepancies in loan terms. If you notice something is off, reach out to your lender and title company immediately to have it corrected before closing day.
The Closing Disclosure is one of the final steps in the home-buying process, and reviewing it carefully can help ensure there are no surprises on closing day. Take the time to go over every detail, compare it with your Loan Estimate, and ask questions if anything seems unclear. If you need guidance during the closing process, contact All Seasons Title. We’re here to make sure everything goes smoothly so you can focus on getting the keys to your new home.