Closing Disclosure: Your Complete Guide to Understanding the Final Numbers
Buying a house involves plenty of paperwork, but few documents carry as much weight as your Closing Disclosure. This critical piece of paper holds the final details of your home loan - from interest rates to closing costs. Think of it as your financial roadmap for the entire home purchase.
Closing Disclosure: A Closing Disclosure is a required legal document that provides a complete breakdown of costs, credits, and financial terms for a real estate purchase or refinance transaction. This standardized five-page form shows buyers and sellers exactly how much money they need to bring to closing or will receive from the sale, and must be provided to the borrower at least three business days before closing the loan.
Introduction
The Closing Disclosure replaced the old HUD-1 Settlement Statement back in 2015 as part of a push to make mortgage terms clearer for homebuyers. The switch brought standardized forms that make comparing loans easier.
The three-day rule gives you time to review everything carefully before signing on the dotted line. This cooling-off period protects you from any last-minute surprises at the closing table.
Breaking Down the Five Pages
Each page of your Closing Disclosure serves a specific purpose:
Page 1 shows your basic loan information and total closing costs at a glance
Page 2 breaks down every penny you'll pay in closing costs
Page 3 compares your estimated costs with final figures
Page 4 outlines your loan terms and what happens if you miss payments
Page 5 lists important disclosures and contact information for everyone involved
Key Information You'll Find
Your loan terms section spells out the nuts and bolts of your mortgage:
Interest rate: The percentage you'll pay to borrow the money
Monthly payments: Your principal, interest, taxes, and insurance
Prepayment penalties: Any fees for paying off your loan early
The projected payments section maps out how your payments might change over time. Your closing costs detail every fee involved in processing your loan and completing the sale.
Common Questions and Concerns
What if there are mistakes?
Contact your lender right away if you spot errors. Small typos might not need a new disclosure, but significant changes will restart your three-day review period.
Can changes be made after receiving it?
Yes, but certain changes trigger a new three-day review period:
APR increases by more than 1/8%
A prepayment penalty is added
Your loan product changes
Comparing Documents
Your Closing Disclosure should match your Loan Estimate closely. Some costs might vary slightly, but major differences need explanation. The new format makes it easier to spot discrepancies than the old HUD-1 did.
Tips for Review
Check these key areas:
Loan amount and monthly payments
Interest rate and whether it can change
Closing costs and credits
Spelling of names and property address
If something looks off, speak up. Your real estate agent can help explain any confusing terms or numbers.
Conclusion
Take time to review your Closing Disclosure carefully - this document determines your financial commitment for years to come. Once you're satisfied everything looks correct, you're ready to move forward with closing.
Ready to start your home buying journey? Bellhaven Real Estate's agents know every page of the Closing Disclosure inside and out. We'll help you understand exactly what you're signing and make sure your interests are protected throughout the process. Contact us to begin your path to homeownership.