Understanding Your Closing Disclosure

The Closing Disclosure is a five-page federal form that replaced the old HUD-1 for most consumer mortgages.

Your lender must deliver it at least three business days before closing. That window exists so you can read it, not so you can sign it faster.

The Loan Estimate came within three days of your application. The Closing Disclosure is the final version of the same numbers. Put them side by side.

Some charges can legally increase, some can only increase within a tolerance, and some cannot change at all without a valid reason. If a number moved and nobody told you why, ask before you sign.

Review the loan amount, interest rate, monthly principal and interest, whether any of them can increase, and whether there is a prepayment penalty or balloon payment.

Also review your estimated total monthly payment including escrow.

This page is split into Loan Costs and Other Costs. Loan Costs are what the lender charges: origination, points, appraisal, credit report, and any services you did or did not shop for.

Other Costs are taxes, recording fees, prepaids like homeowners insurance and interest, and your initial escrow deposit. Title and escrow charges appear here, and in most markets which party pays which line is set by the purchase contract or local custom.

The Calculating Cash to Close table shows what changed since the Loan Estimate and why.

The Summaries of Transactions section shows the buyer's and seller's columns side by side, including the earnest money credit and the tax proration.

This is a credit for expenses the seller owes but has not paid, most often property taxes. It reduces your cash to close.

Treat it as money set aside for a bill that has not arrived yet, not as a discount.

Review escrow account details, including what happens if you decline one, late payment terms, whether the loan is assumable, partial payment policy, and the contact information for everyone on the file.