Previously, we discussed the importance of the Loan Estimate form. The Loan Estimate form is a key closing document for your home mortgage, and it is followed up by the Closing Disclosure form. The Closing Disclosure form will contain the locked-in costs of your loan and the specific amount you will need to pay at closing. Understanding this form, what each section specifies, and how to thoroughly check it, is essential for a satisfactory homebuying experience.
What is the Closing Disclosure Form?
After choosing a lender and making it through the mortgage underwriting process, you will receive the Closing Disclosure. This form provides the same information as the Loan Estimate but in its final form. This means that the costs will be locked-in, and you will know the specific amount you need to pay at closing.
When You Receive the Document
This document will be given to you three days before your scheduled loan closing. You can use this time to review the document for changes, comparing your Closing Disclosure with your previous Loan Estimate.
The Closing Disclosure form is five pages long, but page three requires the most review. A comparison table is at the top of the page, which shows you the costs reported by the Loan Estimate alongside the actual charges to be applied. At the bottom of the page will be the total amount you, the borrower, will owe at closing.
Causes of a Three-Day Delay
Any significant revision to the loan’s terms will trigger a new three-day review. However, changes in the amount of a real estate agent’s commission, modifications to the escrow, or adjustments to prorated payments for taxes, utilities, and more do not qualify for a new review. There are only three things that will “reset” the clock:
- If the APR Increases by more than 1/8th of a percentage point for fix-rate loans. Or, it increases by more than a quarter of a percentage point for adjustable-rate mortgages.
- When a prepayment penalty is added to the loan terms
- If the loan product changes, for instance, moving from a fixed-rate to an adjustable-rate loan or an interest-only mortgage.
Just One Closing Document Among Many
You will inevitably see many other documents throughout the loan closing process. However, the Loan Estimate, combined with the Closing Disclosure, are two legally binding documents that bookend the loan process. The Loan Estimate will come after you apply with a lender, while the Closing Disclosure form will arrive when you’re nearing the mortgage finish line. Once you’ve received them, you nearly have your new home!
A Title Company You Can Trust: Colony Title
At Colony Title, we will help you through the process of getting your property’s title and help you avoid the pitfalls of hidden costs while you buy your home. We are also well trained in identifying any and all errors in public records and helping you resolve them. We specialize in real estate title insurance in both Maryland and Washington, D.C., and we will perform an expert title search, check through all past documentation, and examine records for any fraud or forgery. For more information on how we can get you into the home of your dreams, contact us online or give us a call at (410) 884-1160. To get more updates on housing markets and how to get into your home, follow us on Facebook, Twitter, LinkedIn, and Google+.