Buying or selling a house can be a daunting experience. Many find the amount of paperwork that a real estate transaction generates, including the closing disclosure, to be one of the more challenging aspects of the selling or buying process. So, what is a closing disclosure?
As experienced mortgage brokers, Champions Mortgage Team is familiar with closing disclosures. Our post below explains the documentation in more detail.
What Is a Closing Disclosure and Why Is It Important?
The closing disclosure is an essential part of the mortgage closing process. It’s a five-page statement with the final loan terms and costs. The disclosure is provided by the lender for homebuyers to use to compare the information on the loan estimate with the final terms and costs.
Knowing the answer to “What is a closing disclosure?” is a must as a home seller or buyer. The closing disclosure form is an essential document for real estate transactions for the following reasons:
- Transparency: The document ensures transparency with the closing costs breakdown.
- Accuracy: Sellers and buyers can ensure that they don’t have hidden fees or unnecessary expenses with the closing disclosure.
- Protection: The paperwork protects against hidden or unexpected fees.
- Review: Using a closing disclosure, sellers and buyers can negotiate for essential changes before the closing.
What Closing Disclosures Include
Now that you know the answer to “What is a closing disclosure?” you may also wonder what the five-page document contains. Here are some terms and characteristics to expect in the disclosure:
- Loan terms: Loan terms include the mortgage amount, interest rate, and monthly payment.
- Costs at closing: This portion of the document shows upfront expenses or settlement costs.
- Projected payments: These fees include the mortgage and estimated taxes, escrow, and insurance.
- Loan disclosures: This section outlines the key characteristics of the loan.
What Is the Three-Day Review Rule?
The three-day rule states that lenders must give the borrower the closing disclosure three days before closing. That timeframe allows the borrower to review cost estimates and ensure nothing has changed drastically during the transaction.
The lender must provide an updated disclosure if they added a mortgage prepayment penalty. A new document is also necessary if the loan product or the annual percentage rate changes. You can’t make changes after signing the document, but adjustments can trigger a new three-day period and a new disclosure.
Explore Your Home Lending Options With Champions Mortgage Team
What is a closing disclosure? It’s an essential document detailing the final details about closing costs and terms of real estate transactions.
If you’re planning to buy a house, it’s important to partner with a lender that prioritizes your best interests. At Champions Mortgage Team, we offer a wide range of flexible home financing solutions at affordable rates. We strive to make the home buying process hassle-free.
Request a consultation with Champions Mortgage Team today at (281) 727-2500.
Frequently Asked Questions About Closing Disclosures
Learn additional details about closing disclosures with our answers to common questions.
What Information Must Be on a Closing Disclosure Form?
Closing disclosures must include details about the loan terms, monthly mortgage payments, closing costs, and other associated fees.
What Should I Do If I Don’t Get a Closing Disclosure?
Contact your mortgage lender immediately if they don’t give you the legally required closing disclosure. Don’t continue with the closing process until you have time to obtain and review the document.
What Is a Closing Disclosure Red Flag?
Closing disclosure red flags include inaccurate personal information, unexpected changes in closing costs, hidden costs, and unexplained fees.
How Do You Check a Closing Disclosure?
Check your closing disclosure by comparing it to your loan estimate. When doing a loan estimate comparison, check your contact information, loan type, interest rate, and fees.
