What is a closing disclosure? The five-page federal form stating the final terms and costs of a mortgage, which the buyer must receive at least three business days before signing.
The closing disclosure is the last statement of what a home loan will cost: the loan amount, rate and monthly payment; every closing cost, who pays it and whether it can change; the cash needed to close; and the total paid over the life of the loan. It replaced the old HUD-1 and truth-in-lending forms in 2015 and it is laid out to be compared line by line with the loan estimate the lender issued at application.
The three-business-day rule is the part that moves closing dates. The lender must ensure the buyer receives the disclosure three business days before signing the loan documents, and a change to the rate, the loan product or the addition of a prepayment penalty restarts the three days. A Friday delivery means a Wednesday signing at the earliest. Smaller changes are fixed with a corrected disclosure at the table.
Read it against the loan estimate. Some fees cannot rise at all (the lender's own), some can rise ten percent in aggregate (third-party services the lender chose), and some can change freely (services you shopped for, prepaids). A fee that moved more than the rule allows has to be refunded. The seller receives a separate settlement statement, not this form.
A worked example
A buyer's loan estimate showed $4,200 in lender fees and a 6.375 percent rate. The closing disclosure arrives on a Thursday showing $4,200 and 6.375 percent, with the title fees $180 higher because the buyer chose a different title company. Signing is the following Tuesday: Friday, Monday and Tuesday are the three business days, and Saturday counts only if the lender is open.
Estimate the payment before the disclosure arrives
Questions people ask
How long before closing do you get the closing disclosure?
At least three business days before you sign the loan documents, by federal rule. Lenders usually issue it a week out to leave room for corrections.
What if the closing disclosure is different from the loan estimate?
Compare line by line. Lender fees cannot rise; some third-party fees can rise ten percent in total; services you shopped for can change freely. A fee above its limit has to be refunded, and a changed rate or loan product restarts the three days.