Closing Disclosure
A Closing Disclosure is a five-page document that provides final details about the mortgage loan including loan terms, projected monthly payments, and closing costs. Lenders must provide this document at least three business days before closing, allowing buyers to review and compare with their original Loan Estimate. It replaces the previous HUD-1 Settlement Statement for most transactions.
Example
“The lender provided the Closing Disclosure three days before closing, detailing the final loan terms and all associated costs.”
Memory Tip
Think "disclose before you close" - this document reveals all the final details before closing the deal.
Why It Matters
The Closing Disclosure gives buyers a final opportunity to verify loan terms and costs before closing, protecting them from last-minute surprises or changes. The three-day review period allows time to address any discrepancies or questions with the lender.
Common Misconception
Some buyers think the Closing Disclosure is just another form to sign quickly, but it's a crucial document that should be carefully reviewed against the original Loan Estimate.
In Practice
Three days before closing, the buyer receives the Closing Disclosure showing their final interest rate of 4.25% and total closing costs of $8,500. They notice the rate increased from their Loan Estimate and contact their lender to understand why before proceeding to closing.
Etymology
Combines "closing" (completion) with "disclosure" from Latin "dis" (apart) and "claudere" (to close), meaning "to open apart" or reveal information at completion.
Common Misspellings
Compare the best financial products for you
More in selling
Other selling terms you should know
Need financial definitions?
Clear definitions for 2,500+ finance, insurance, and investing terms.