The closing disclosure form is a 5-page document which a lender will provide a borrower that details the terms of a mortgage.
The lender must deliver it to the borrower at least 3 business days before closing a mortgage.
It is somewhat an extended version of the loan estimate form which is given to a borrower within 3 days of loan application.
Information contained in this form includes:
- Down payment
- Finance charges
- Annual percentage rate
- Credit report fees
- Tax monitoring fees
- Insurance premiums
The main different between the loan estimate and closing disclosure forms are that the latter is a more accurate representation of the costs involved in closing.
This is because things can change between the time of application and the time of closing.
The prices presented at the point of application could very well be generic prices anyway. So the closing disclosure document will give a borrower a much clearer picture of the costs involved.
The closing disclosure replaces the previous HUD-1 statements and Truth-in-Lending disclosures.
It is definitely a step forward.