The Consumer Finance Protection Bureau defines the Closing Disclosure (CD) as “A five-page form that provides final details about the mortgage loan you have selected.” Though an accurate generalization, there are additional details and instructions to accompany this definition. Without the knowledge of these details, you may not know how to react to the CD to ensure the closing of your loan is smooth.
Time is of the essence. It is very important that you “acknowledge” that you have seen the Closing Disclosure as soon as you are able. Your acknowledgment starts a clock that allows the loan to close. Federal law requires that you acknowledge receipt of this document three days before closing your loan. If it’s important to close quickly, make it a priority to receive, review, and acknowledge the CD right away.
It’s important to note that acknowledging the CD does not mean you are officially approving the final numbers of the transaction. Continue reading to understand why.
There are typically two Closing Disclosures that you will see. You will see the first draft at least three days before you close your loan. The final version does not come until you sign your final loan paperwork. The first draft should be close to the final numbers however, there are almost always a few changes. Usually these changes are in your favor. CDs are federally regulated documents. Closing a loan with numbers far worse than presented in the first draft of the Closing Disclosure is not allowed. That said, if there are any errors on this first draft of the CD, be sure to communicate them to your Mortgage Advisor. Make sure your name and address are correct, and the loan terms are good or better than you were expecting.
Final Draft at Closing
When you sign all the final legal loan documents (known as the “closing” or “final signing, this includes Note, Deed of Trust, and other legal documents) the final Closing Disclosure will be included. This is when you go over each item on this document in detail. The Consumer Finance Protection Bureau has created a guide to help you in this process.
We desire to guide our clients through the mortgage process from beginning to end. It is our policy to have our Mortgage Advisors present for your closing. We are responsible for much of this document and want to make sure it’s completely understood prior to signing.