Understanding Your Closing Disclosure
The Closing Disclosure (CD) is a five-page federal form that details every cost, payment, and term of your mortgage — delivered at least three business days before closing. Errors on the CD can delay closing or cost you money. This guide walks through each section of the form, what to compare against your Loan Estimate, and what changes are allowed in the final days before closing.
The Closing Disclosure is the most important document you'll sign before your mortgage closes — and the one most borrowers skim. It locks in every fee, rate, and term from your Loan Estimate. Errors happen, and some are expensive. This guide walks through every page, what to compare, what to dispute, and how to use your three-day review window.
Closing Disclosure vs Loan Estimate: what can change?
| Section | Charges | Tolerance rule |
|---|---|---|
| Section A | Origination charges, discount points | Zero tolerance — cannot increase |
| Section B | Required services (appraisal, credit report) | Zero tolerance — cannot increase |
| Section C (lender's list) | Title, settlement (shopped from lender list) | 10% aggregate tolerance |
| Section E | Prepaid interest, insurance, property taxes | No tolerance (can change freely) |
| Section F | Initial escrow payment | No tolerance |
| Section H | Other costs (recording fees, transfer taxes) | Zero tolerance (transfer taxes); no tolerance (recording fees) |
Page-by-page review: what to check
- 1 Receive and verify your three-business-day window
Under RESPA/TRID rules, your lender must provide the Closing Disclosure at least three business days before your scheduled closing date. If the CD is not provided in time, closing must be delayed — this is a federal right, not a courtesy. Use this window to review it carefully. If the lender sends a revised CD (due to an allowed change), the three-day clock resets. Calendar the delivery date and confirm receipt in writing.
- 2 Check page 1: loan terms and projected payments
Page 1 contains the core loan summary: loan amount, interest rate (confirm fixed or adjustable), monthly P+I payment, whether there is a prepayment penalty or balloon payment, estimated total monthly payment (PITI + MIP if applicable), and estimated cash to close. Compare each item to your Loan Estimate. The rate and loan amount should match what you locked. If there is a prepayment penalty, confirm it was disclosed upfront — this is a material change if it appeared only on the CD.
- 3 Review page 2: closing cost details
Page 2 breaks down closing costs in the same A–H section structure as the Loan Estimate. Section A: origination charges (loan origination fee, discount points) — these cannot increase from the LE. Section B: services you could not shop for (appraisal, credit report) — also cannot increase. Section C: services you did shop for — can increase by up to 10% in aggregate. Section E: prepaid items (homeowner's insurance, prepaid interest, property taxes) — may change. Section F: initial escrow payment — may change. Section H: other (title insurance, recording fees) — compare with LE tolerance rules.
- 4 Verify page 3: cash to close and summaries
Page 3 shows the final cash-to-close amount and the transaction summary (purchase price, loan amount, credits, seller concessions, and all adjustments). If seller credits changed between the purchase contract and closing, confirm they are correctly reflected. If you're receiving a lender credit in exchange for a higher rate, verify the credit amount matches your rate lock. Any discrepancies between the Loan Estimate and Closing Disclosure that are outside tolerance thresholds require a corrected CD — contact your lender immediately if numbers don't reconcile.
- 5 Check page 4: loan disclosures and escrow table
Page 4 contains disclosures about assumability, demand feature, negative amortization (these should say "No" for standard loans), and the escrow account table. The escrow table shows your initial escrow deposit, monthly escrow payment, and the cushion the lender is holding. Verify the property tax amount matches your county's bill and the insurance matches your policy. Escrow miscalculations are common — an error here affects every monthly payment for the life of the loan.
- 6 Review page 5: loan calculations and contact information
Page 5 shows total of payments (all 360 payments), finance charge, amount financed, and APR. Compare the APR on the CD to the APR on your Loan Estimate — if it moved significantly, ask why. Identify your lender, mortgage broker, real estate agents, and settlement agent with license numbers and contact information. Keep the CD indefinitely — it is the authoritative record of your mortgage terms and closing costs, useful for tax deductions (mortgage interest and points), refinance planning, and dispute resolution.
Common Closing Disclosure errors to flag
- ! Loan amount differs from Loan Estimate without explanation
- ! Interest rate changed after confirmed rate lock
- ! Seller credits are missing or reduced from the purchase contract
- ! Origination fee increased (zero-tolerance violation)
- ! Wrong property tax estimate (affects monthly escrow for years)
- ! Prepayment penalty appearing for the first time
External references
- CFPB — Closing process and Closing Disclosure
- CFPB — What is a Closing Disclosure?
- CFPB — TRID tolerance and change rules
- HUD — RESPA mortgage disclosure overview
Common questions
What is the difference between a Loan Estimate and a Closing Disclosure?
The Loan Estimate (LE) is a three-page form provided within three business days of your mortgage application. It shows estimated costs based on the application — before underwriting is complete. The Closing Disclosure (CD) is the final version, provided at least three business days before closing, showing the actual costs. TRID rules (the TILA-RESPA Integrated Disclosure rule) specify which costs can change between LE and CD and by how much: Section A charges (origination fees) cannot change at all; Section B charges (lender-required third-party services) cannot change; Section C charges can increase by up to 10% in aggregate; Section E/F/H charges can change without limit due to market changes. The CFPB closing process guide explains LE vs CD in detail.
What changes can legally happen between the Loan Estimate and Closing Disclosure?
TRID tolerance rules define what can change: (1) Zero tolerance — cannot increase: origination charges (Section A), credit report fee, appraisal fee if required by lender, transfer taxes, and services where the lender selected the provider; (2) 10% tolerance — aggregate Section C charges (services the borrower shopped for from the lender's list) cannot increase more than 10% in total; (3) No tolerance (can change freely): prepaid interest, homeowner's insurance premium, initial escrow deposit, charges for third-party services not on the lender's list, and recording fees. If zero-tolerance charges increase, the lender must cure the violation (refund the overcharge) within three business days of closing. See the CFPB TRID guide for the full tolerance framework.
What happens if I find an error on my Closing Disclosure?
Contact your lender or settlement agent immediately. Common errors include: wrong loan amount, incorrect interest rate, missing seller credits, wrong property tax estimates, duplicate fees, or incorrect APR. If the error is material (changes your cash-to-close or monthly payment), the lender must issue a corrected CD and the three-business-day window resets — meaning closing must be delayed. Minor errors (e.g., wrong mailing address) can be corrected at the closing table with an amended CD. Don't close with unresolved errors — once the loan closes, correcting terms becomes significantly more complex. The CFPB Closing Disclosure explainer describes your rights.
Does Canada have an equivalent to the Closing Disclosure?
Canada does not have a standardized federal equivalent to the US Closing Disclosure. In Canada, mortgage disclosure is governed by the Cost of Credit Disclosure (COCD) Act requirements at the provincial level and the federal Bank Act (for federally regulated lenders). You will receive: (1) A mortgage commitment letter from the lender detailing rate, term, amortization, and conditions; (2) A Statement of Adjustments from your real estate lawyer at closing, showing all credits, debits, and the final cash requirement; (3) A mortgage statement summarizing the final approved terms. Unlike the US, where TRID timelines are federally mandated, Canadian lawyers typically provide the Statement of Adjustments 1–3 days before closing. See the mortgage commitment letter glossary entry for what Canadian borrowers receive.
Can I back out of a mortgage after receiving the Closing Disclosure?
Technically yes — you are not legally bound to close simply because you have received the CD. However: (1) If you back out without a valid reason (e.g., a failed home inspection contingency), you may forfeit your earnest money deposit; (2) If a disclosed change on the CD triggers a valid financing contingency (e.g., loan terms materially worsened), you may be able to withdraw and recover your deposit — consult your real estate attorney; (3) The three-business-day review period is specifically designed to give you time to identify material problems before closing — use it. For a refinance, there is an additional right of rescission: three business days after closing to cancel a refinance on your primary residence under the Truth in Lending Act. Details at CFPB right of rescission.
What should I bring to the closing table?
After reviewing your Closing Disclosure, arrive at closing with: (1) Government-issued photo ID — required by the notary or closing attorney; (2) Cashier's check or wire transfer confirmation for the cash-to-close amount (personal checks are typically not accepted for large amounts); (3) Homeowner's insurance binder — proof of coverage must be provided before or at closing; (4) Any outstanding conditions your underwriter requested; (5) A copy of your Closing Disclosure and Loan Estimate for reference. Do not bring: large cash amounts (wire fraud is common — verify wire instructions directly with your settlement agent by phone, never by email). See the mortgage closing day checklist for the complete list.
Review the Loan Estimate guide, use the closing day checklist, or explore all closing costs explained.