What Is a Closing Disclosure?

A closing disclosure is a multi-page document provided to you by your lender that details all of the costs associated with your mortgage loan — the total loan amount, interest rate, monthly principal, and interest payments. This is the last document you will receive from your lender prior to closing, so it’s critical that you understand each section of the form before going to closing.

When will I get my closing disclosure?

Your lender is required by the Consumer Financial Protection Bureau (CFPB) to send you a closing disclosure at least three business days before you close on the loan. This is meant to give you time to look over the document carefully, ask any questions you have, and bring any discrepancies or typos to the attention of your loan officer. 

You should take this time to compare your closing disclosure with your loan estimate to make sure you understand if there have been any changes. Pay special attention to three specific areas, as changes here may require the lender to send you a revised closing disclosure and restart your three-day period.

• Loan Product. You’ll find this on the top right corner of the first page of the document in the “Loan Information” section. For example, your loan product may have been listed as a fixed rate on your loan estimate, but you may decide to change your loan product to a different type of loan.
• Prepayment Penalty. This is listed on the first page of the document in the “Loan Terms” section. You may need to restart your three-day period if there has been a change in the prepayment option.
• Annual Percentage Rate (APR). The APR is on the fifth page of your loan disclosure, which is the third page of your loan estimate — in the “Loan Calculations” section. It should be the same in both documents and — if the change is more than .125% — could require a revised three-day period. 

What’s the difference between a closing disclosure and a loan estimate?

A closing disclosure is like the final draft of your loan estimate. The two documents contain much of the same information. While the loan estimate is the lender’s best estimate of costs, the closing disclosure tells you the actual final costs you’ll pay on your loan. There are other differences in the timing of receipt, information required, and document length. You receive a loan estimate up to three business days after submitting your application, but you receive your closing disclosure at least three business days before closing. 

After I receive the closing disclosure, am I clear to close?

Generally, if you are satisfied with the closing disclosure, you may be clear to close on the loan. The lender may still have to finalize paperwork and follow up on any outstanding items. Keep in mind that you have not finalized the loan until you sign the final paperwork at closing. After that, you can get the keys to your new home.

To learn more about PenFed loans or determine which loan is right for you:

• Call 866-386-7254
• Visit the Mortgage Center