Closing Disclosure: What to Check During the Three-Day Review Before Closing
The Closing Disclosure arrives at least three business days before closing. What to compare against your Loan Estimate and which changes restart the clock.
The Closing Disclosure is the five-page form that gives a home buyer the final details of a mortgage before signing: the loan terms, the projected monthly payments and the fees and other costs of getting the loan. According to the Consumer Financial Protection Bureau, the lender must provide it at least three business days before closing, and those three days are meant for checking the numbers, not just waiting.
What is a Closing Disclosure?
The Closing Disclosure replaced older settlement forms for most mortgages when the federal Know Before You Owe rule took effect on Oct. 3, 2015. The CFPB describes it as the document that lets a borrower compare final terms and costs with the Loan Estimate received earlier in the process, and ask questions before arriving at the closing table.
The bureau notes that some transactions use different forms. Reverse mortgages, for example, still use a HUD-1 settlement statement and a final Truth in Lending disclosure instead.
What should buyers compare against the Loan Estimate?
The CFPB's Closing Disclosure Explainer walks through the form line by line. Its main checks include:
- Loan basics. The loan term, purpose, product and loan type should match the most recent Loan Estimate. If they do not, the bureau advises asking the lender why they changed.
- Loan amount and interest rate. An increase in the loan amount can mean closing costs were rolled into the loan. If a rate was locked, the CFPB says the lender may change it only under limited circumstances.
- Risky features. Buyers should look for a prepayment penalty or a balloon payment, both of which the bureau labels risky.
- Monthly payment and escrow. The Estimated Total Monthly Payment should match the most recent Loan Estimate; if it does not, the CFPB says to ask the lender why. Buyers should also note any taxes, insurance or assessments that are not paid through escrow.
- Closing costs and cash to close. Both should be compared with the Loan Estimate. Services the buyer did not shop for should look similar to the earlier estimate, and any unfamiliar service or company is worth asking about.
- Seller credits. Any credit the seller agreed to contribute should appear as negotiated.
Iron Hill Brief's explainer on what mortgage closing costs include covers the cost categories in more detail, and the monthly payment calculator can help a buyer see how the pieces of a payment fit together before reviewing the form.
Which changes restart the three-day clock?
Most last-minute changes do not delay closing. According to the CFPB, only three changes require the lender to give the borrower a new three-business-day review period:
| Change on a corrected Closing Disclosure | New three-day review required? |
|---|---|
| APR increases by more than 1/8 of a percentage point (fixed-rate loan) or 1/4 of a percentage point (adjustable-rate loan) | Yes |
| A prepayment penalty is added | Yes |
| The loan product changes, such as fixed-rate to adjustable-rate | Yes |
| Typos, walk-through problems and most changes to payments made at closing, including seller credits | No |
Source: Consumer Financial Protection Bureau.
The bureau also notes that a decrease in the interest rate or fees does not cause a delay. Because problems are easier to fix before closing day, the CFPB encourages borrowers to use the review period to resolve anything that looks different from what they expected.
Frequently asked questions
When will I get my Closing Disclosure? The lender is required to provide it at least three business days before closing, according to the CFPB.
Does every change to the Closing Disclosure delay my closing? No. The CFPB says only an APR increase beyond the set tolerance, a new prepayment penalty or a change in loan product triggers a new three-business-day review. Other corrections can be made without restarting the clock.
What if my Closing Disclosure doesn't match my Loan Estimate? The CFPB advises asking the lender to explain any difference in the loan terms, loan amount, interest rate, closing costs or cash to close before signing. Buyers who are comparing earlier offers can also review Iron Hill Brief's guide to mortgage preapproval vs. prequalification.
Sources
- Consumer Financial Protection Bureau, "What is a Closing Disclosure?" (last reviewed May 2, 2023): https://www.consumerfinance.gov/ask-cfpb/what-is-a-closing-disclosure-en-1983/
- Consumer Financial Protection Bureau, Closing Disclosure Explainer (page last modified Oct. 10, 2023): https://www.consumerfinance.gov/owning-a-home/closing-disclosure/
- Consumer Financial Protection Bureau, "Know Before You Owe: You'll get 3 days to review your mortgage closing documents" (June 3, 2015; updated July 27, 2015): https://www.consumerfinance.gov/archive/blog/know-before-you-owe-youll-get-3-days-to-review-your-mortgage-closing-documents/