A Guide to Closing Disclosures

Buying a new home can be both a joyous occasion and one filled with stress and anxiety, especially if you don’t understand the process. One of the more confusing aspects of the closing process is understanding the closing disclosure. This is a critical piece of the closing puzzle which signifies you’re one step closer to the finish line.

In this guide, we’ll tackle common questions homebuyers have regarding the closing disclosure.

Does a Closing Disclosure Mean It’s Time to Close?

You’ll receive a closing disclosure form when you’re nearing the end of your closing journey. This is a five-page document like your original loan estimate, outlining the final terms and costs of your mortgage.

The closing disclosure form is designed to provide more information to borrowers and outlines the loan terms, which ones can change and by how much. It’s crucial you look it over carefully as it’s one of the most important documents you’ll receive pertaining to your closing.

Federal requirements mandate that the form goes out at least three days before your closing. Keep in mind, once you receive your final closing disclosure, it doesn’t mean you’ll close in three days – that’s just the soonest you could close if all the stars align in your favor.

Items You May See in Your Closing Disclosure Form:

• Loan terms such as the loan amount, interest rate, estimated monthly payments, any prepayment penalties, and if applicable, balloon payment.
• Monthly mortgage payment breakdown showing interest and principal amounts, mortgage insurance, and estimated escrow payment.
• Closing costs showing what you owe at closing.
• Loan costs including origination charges and other service charges.
• Other costs like taxes, fees, any prepaid costs, and additional fees like a home warranty.
• Cash to close table explaining what costs have changed since your original loan estimate.
• Transaction summary table showing what you’ll pay versus what the seller is paying.
• Loan disclosures showing terms that apply to your loan.
• Loan calculations like the total of your payments, finance charges, amount financed, total interest, and annual percentage rate.
• Contact information for the brokers, lenders, and settlement agent that helped with your loan.

How Long Does It Take to Reach the Closing Disclosure Step?

Let’s say you find your dream home, put in an offer, and the seller accepts it. Now what? Well, now you wait and it may take anywhere from 30 to 45 days for the lending process to be fully approved. If you’ve been pre-approved for a loan, the waiting period may be shorter, but until an underwriter puts their stamp of approval on a loan, you’re at their mercy.

The question remains, does receiving my closing disclosure mean you’re clear to close? You typically receive the clear to close once you’ve met all the underwriter’s requirements and have been approved for funding. Yet, signing the disclosure doesn’t mean you’re clear to close, but it does mean you’re one step closer as you can’t close until you sign the disclosure.

Can I Waive the 3-Day Closing Disclosure?

So, what happens when you need to move in as quickly as possible? Can you opt out of the three-day waiting period? Under federal law, a lender must send a closing disclosure to the buyer that outlines the final terms of the mortgage. The time window is legally required, but you may request the lender to waive it. However, lenders will typically deny this request due to legal concerns.

It’s a good idea to review the closing disclosure thoroughly. Even the smallest of errors could cause major headaches later.

Here’s a checklist for examining your final closing disclosure.

• Make sure all names are spelled correctly.
• Be sure the loan type is the one you applied for.
• Check to see the interest rate is the one you locked in on your loan estimate.
• Confirm the length of the loan term.
• Be aware of the cash to close number as this is the amount of money you need to bring to close.
• Verify the closing costs are what was agreed upon.
• Make sure the loan amount is accurate.
• Are the estimated monthly payments correct?
• Be aware of amounts that could change over time like your taxes, insurance, and other payments like HOA dues.

If you find something wrong with your closing disclosure, notify the lender or title company as soon as possible. If there are significant corrections needed, the disclosure will need to be redone, and this could require your closing to be pushed back a few days because you’ll have to review the new document and wait another three days before closing.

Key Closing Takeaways

All documents, whether lender- or state-required, are essential to the closing of your home and should not be taken lightly. Some may have criminal penalties for falsifying information and others may give your lender the right to call your loan. This means the entire loan becomes immediately due and you must pay it. Get clarification and ask questions on items you’re not sure about.

Remember, once all underwriting requirements have been met, all documentation has been signed, and the closing agent is satisfied, you’re ready to close!

Are you planning to close on a home soon?

At Bay National Title Company, we offer services for buyers and sellers of all types. Our dedication to our customers is in our everyday actions, and our top concern is to alleviate customer title concerns through open communication and meticulous work.

Buying or selling a home doesn’t have to be difficult. We’re here to provide you with the latest real estate and title industry news to be smart, prepared, and triumphant in your next real estate deal.

We also produce excellence in title services throughout the United States, giving you peace of mind and a better closing experience. From title policies and title searches to document and settlement services, Bay National Title Company is committed to providing you with the best closing experience possible.

Contact us today for more information on how we can help you.