Closing Disclosure

What is the Closing Disclosure?

The Closing Disclosure (formerly known as the HUD-1) is a 5-page document that details the critical aspects of your mortgage loan: purchase prices, loan fees, interest rate, estimated real estate taxes, estimate insurance, closing costs. Your lender is legally obligated to give you your Closing Disclosure three business days before closing so that you have plenty of time to review it.

Why does the Closing Disclosure matter?

The Closing Disclosure is a form that formally tells you how much the loan will cost. Therefore, it’s critical to review it, understand it, and check for any mistakes. Remember: once you sign your final Mortgage Note on closing day, you’re legally obligated to repay the loan according to the terms reflected in the Closing Disclosure.

One of the most important things you should do is to compare the Closing Disclosure to your Loan Estimate. You should make sure that they are relatively similar to ensure that no costs were added and that the terms you were initially promised are the terms you will get.

So, check that the spelling of your name, loan term, purpose, product, loan type, loan amount, estimated Total Monthly Payment, Closing Costs, and Cash to Close all align with those in your Loan Estimate.

What should you do if the Closure Disclosure is much different than your Loan Estimate?

If there are any misspellings in your Closing Disclosure, make sure your lender corrects them. Even minor misspellings can cause major problems later on. Additionally, if there are any significant discrepancies in loan terms between your Closing Disclosure and Loan Estimate, call your lender as soon as possible to find out why.