Three business days before you close on a home, your lender is required to provide you with a Closing Disclosure. Most buyers glance at the bottom line and move on. That's a mistake — this document contains every fee, rate, and term of your mortgage, and errors in it can cost you thousands of dollars.
What Is a Closing Disclosure?
The Closing Disclosure (CD) is a standardized 5-page document created by the Consumer Financial Protection Bureau (CFPB) that shows:
- Your final loan terms (rate, type, monthly payment)
- Every closing cost and who pays it
- The exact amount of cash you need to bring to closing
- A projection of your payments over the life of the loan
Lenders are legally required to provide it at least 3 business days before closing — so you have time to review it.
Page 1: The Summary
The first page contains the most critical information:
Loan Information
- Loan Term: How long you're borrowing (15, 20, or 30 years)
- Purpose: Purchase, refinance, or construction
- Product: Fixed-rate or adjustable (ARM)
- Loan Type: Conventional, FHA, VA, USDA
Loan Terms Table
This critical box shows:
- Loan Amount: The principal you're borrowing
- Interest Rate: Your locked rate — verify it matches your Loan Estimate
- Monthly Principal & Interest: The base payment (before taxes and insurance)
- Prepayment Penalty: Whether you'll be charged for paying off early
- Balloon Payment: Whether a large lump sum is due at term end
Red flag: If the rate, amount, or any term differs from your original Loan Estimate, stop and ask your lender to explain before proceeding.
Projected Payments
Shows your estimated monthly payment broken down:
- Principal & Interest
- Mortgage Insurance (PMI, if applicable)
- Estimated Escrow (taxes + homeowner's insurance)
- Total Estimated Monthly Payment
Costs at Closing
Two key numbers at the bottom of page 1:
- Closing Costs: All fees (origination, third-party services, prepaid items)
- Cash to Close: The total you bring to the closing table
Page 2: Closing Cost Details
This is the most detailed and scrutinized section.
Section A: Origination Charges
Fees charged by your lender:
- Origination fee: Typically 0.5–1% of the loan amount
- Points: Prepaid interest to buy down your rate (1 point = 1% of loan)
- Underwriting fee
- Application fee
These are negotiable — compare to competing lenders.
Section B: Services You Cannot Shop For
Required services where the lender picks the vendor:
- Appraisal fee
- Credit report
- Flood determination
- Tax monitoring fee
Section C: Services You Can Shop For
Required services where you can choose the vendor:
- Title insurance (owner's + lender's)
- Title search
- Settlement/closing agent fee
- Attorney fee (in attorney-closing states)
Tip: Shop these independently — lender-referred vendors are often 20–30% more expensive.
Section E: Taxes and Government Fees
- Recording fees (county recorder's office)
- Transfer taxes (varies by state)
Section F: Prepaids
Money paid in advance:
- Homeowner's insurance premium (often 12–14 months)
- Property tax deposits
- Mortgage interest (from closing date to first payment)
Section G: Initial Escrow Payment
The upfront cushion for your escrow account:
- 2–3 months of homeowner's insurance
- 2–3 months of property taxes
Section H: Other
Any other fees — home warranty, HOA transfer fees, etc.
Page 3: Cash to Close and Summaries
Shows the reconciliation between what you're bringing in and what's going out:
- Closing costs you're paying: From page 2
- Closing costs paid by seller: Seller concessions (negotiated credits)
- Lender credits: Any credits the lender is applying
- Down payment / funds from borrower: Your down payment
- Loan amount: What the bank is putting in
- Net Cash to Close: The final number — what you wire or bring as a cashier's check
Pages 4–5: Loan Disclosures
These pages contain the legal disclosures about your mortgage:
- Assumption policy (whether your loan can be assumed by a buyer)
- Demand feature (whether the lender can demand full payment)
- Late payment terms (grace period, penalty amount)
- Negative amortization language (if applicable)
- Escrow account disclosures
- Total payments over the life of the loan (the true cost of financing)
Comparing to Your Loan Estimate
You should have received a Loan Estimate (LE) when you applied. Compare it line-by-line to the CD:
| Category | Can Increase? | Cap | | --------------------------------------------- | ----------------------------------------------- | --------------------------------------- | | Origination charges | Yes, only if you changed loan terms | Cannot increase without justification | | Required third-party services (lender-chosen) | Yes | Limited to 10% aggregate increase | | Required third-party services (your choice) | Yes, if you chose someone off the approved list | None | | Transfer taxes | Yes | 10% aggregate | | Prepaids | Yes | No limit — these reflect actual amounts | | Escrow | Yes | No limit |
If the CD shows increases that exceed the allowable tolerances, the lender must cure the difference — either crediting you or reimbursing you at closing.
What to Do If Something Looks Wrong
- Contact your loan officer immediately (you have 3 days)
- Ask for a specific explanation of any fee that wasn't on the LE
- If a number is wrong, request a corrected CD
- You can delay closing if needed — the 3-day review period exists for this reason
Got a Closing Disclosure you want decoded before signing? Upload it to PaperLens and get a plain-English breakdown of every line — including any fees that might be off. Scan your document →