Three days before closing, your lender will send you a Closing Disclosure, a five-page document that details the terms of the mortgage loan you’re about to enter. This document replaces the often confusing HUD-1 Settlement Statement that used to be given to homebuyers on closing day.
Many changes were made to the disclosure to make it easier to understand, and since you have three days to review it, you should definitely take the time to do so. The extra days give you time to ask your lender questions and to compare the disclosure with the Loan Estimate you received from your lender earlier in the process.
Here are a few things you should look at when you have your Closing Disclosure in hand:
- Check names, addresses, and other contact information for errors.
- Make sure the type of loan, amount, and terms match the information on the Loan Estimate.
- Is the interest rate amount and type the same?
- What are the fees you’ll pay for this loan?
- How much will you need to bring to closing?
Your Closing Disclosure will also tell you how much you’ll pay over the life of the loan (see page 5) and answer many other questions. Don’t be surprised if this number is much higher than your loan amount; remember that you’ll be paying interest over the life of the loan.
Delve deeper into your Closing Disclosure with this helpful guide from the Consumer Financial Protection Bureau.
And, if you’re our client and you have questions while reviewing your Closing Disclosure, don’t hesitate to call us! We can help you understand the document better.