The Closing Disclosure: How to Check It Against Your Loan Estimate
What You’ll Learn
- Why you must receive the Closing Disclosure at least three business days before closing
- How to compare it with your Loan Estimate, page by page
- Which fees can't increase, which can rise up to 10%, and which can change freely
- The three changes that trigger a new three-business-day waiting period
- How to protect yourself from wire fraud before sending closing funds
The Closing Disclosure is the final version of your loan's terms and costs. For most mortgages, federal rules require that you receive it at least three business days before closing. For this rule, business days include every day except Sundays and federal public holidays. That window exists so you can compare it against your Loan Estimate, ask questions and fix problems before you sign, not at the closing table.
Here's how to check it, section by section, and which changes should get your attention.
Put it side by side with your Loan Estimate
The Closing Disclosure is designed to be compared with the Loan Estimate you received earlier. Many of the section names and line labels match. Pull out your most recent Loan Estimate (you may have received revised versions) and our guide to reading a Loan Estimate.
Page 1: the loan itself
Check the Loan Terms: loan amount, interest rate, monthly principal and interest, and whether the loan has a prepayment penalty or balloon payment. Everything should match what you agreed to and, if you locked, your lock confirmation. See how rate locks work.
Then check Projected Payments. This includes mortgage insurance, if any, and the estimated escrow for property taxes and homeowners insurance. Confirm the insurance figure reflects the policy you actually chose.
Finally, look at Costs at Closing, the headline closing costs and cash to close.
Pages 2 and 3: the cost details and cash to close
Page 2 itemizes loan costs (origination charges, services you did and didn't shop for) and other costs (taxes and government fees, prepaids, initial escrow deposit). Page 3 includes the Calculating Cash to Close table. It compares Loan Estimate figures with final figures and flags each line with "Did this change?" That's the fastest way to find differences.
Also on page 3, the Summaries of Transactions show the purchase price, deposits, seller credits and adjustments such as prorated property taxes. Make sure your earnest money deposit and any seller credits from your negotiations appear correctly.
Which fees are allowed to change
Federal rules put fees into tolerance categories:
- Generally can't increase: the lender's or broker's own charges, transfer taxes, and charges for services you weren't allowed to shop for.
- Can increase up to 10% in total: recording fees and third-party services you were allowed to shop for but chose from the lender's list of providers.
- Can change without a limit: items like prepaid interest, homeowners insurance premiums, escrow deposits, and services you shopped for on your own.
Fees can also change legitimately when something changes, such as the loan amount, a rate lock, or information about the property. If a fee rises beyond these limits without a valid reason, the lender must refund the excess, generally within 60 days after closing. Ask your loan officer to explain any increase you don't understand.
Changes that restart the three-day clock
Most corrections just require a revised Closing Disclosure. Three kinds of change require a new three-business-day waiting period:
- The APR increases beyond a small tolerance (or becomes otherwise inaccurate under the rule)
- The loan product changes, for example from fixed to adjustable
- A prepayment penalty is added
That's one reason to review the Closing Disclosure the day you receive it. Catching issues early protects your closing date.
Pages 4 and 5: the fine print
Page 4 explains loan features like assumption, late payment terms and whether you have an escrow account. See what escrow means. Page 5 shows loan calculations, including the total of payments, finance charge and APR, plus contact information for the lender, agents and settlement agent.
Before you wire any money
Wire fraud targeting home buyers is a serious risk. Criminals send fake emails with changed wiring instructions. Never rely on wiring instructions from an email alone. Call your settlement agent at a phone number you've verified independently, such as one from your contract or their official website, to confirm the instructions before sending funds.
A quick checklist
- Loan amount, rate, payment and loan type match your agreement and lock
- Insurance and tax figures in escrow look right
- Each "Did this change?" item on page 3 is explained
- Earnest money and seller credits appear correctly
- Names and property address are correct
- Wiring instructions verified by phone
Frequently asked questions
When do I get my Closing Disclosure?
For most mortgages, you must receive it at least three business days before closing. For this rule, business days count every day except Sundays and federal public holidays.
What's the difference between a Loan Estimate and a Closing Disclosure?
The Loan Estimate is an early estimate of terms and costs. The Closing Disclosure shows the final terms and costs. They're designed to be compared side by side.
Can closing costs go up after the Loan Estimate?
Some can, within limits. Lender fees generally can't increase without a valid reason, certain third-party fees can rise up to 10% in total, and items like prepaid interest and insurance can change.
What changes delay closing?
A new three-business-day waiting period is required if the APR increases beyond tolerance, the loan product changes, or a prepayment penalty is added.
This article is general information about federal disclosure rules for most closed-end consumer mortgages. Some loans and transactions are treated differently, and closing practices vary by state. Ask your lender and settlement agent about your specific loan. Advice4Homeownership is a publisher, not a lender.
