The Closing Disclosure (CD) outlines the terms of a new mortgage to the potential borrower so that they can review it before signing final loan documents. The Closing Disclosure has a standard format to make things are easy to comprehend for borrowers regardless of which lender they decide to work with.
The Closing Disclosure was introduced to the mortgage industry in October 2015 but we are finding that after all of these years, there is still some confusion as to what this disclosure actually represents. In a nutshell,The Closing Disclosure outlines the loan amount, interest rate, monthly principal & interest payment, estimated taxes and insurance (and whether or not they are impounded into the loan), any prepayment penalties, whether the rate can change and a breakdown of the closing costs.
Also included is the APR, total amount of payments and contact information for the individuals that helped through the transaction including lender, real estate agents and escrow officer. It is essentially a condensed document giving you all the key financial details of the transaction.
Borrowers can not close on their loan any sooner than three days after they receive the Closing Disclosure. Borrowers are asked to e-sign the Closing Disclosure to confirm that they received the form but by signing, it does not mean they accept the loan, it just confirms receipt.
If a borrower does not confirm receipt of the Closing Disclosure when it is sent to them, they could potentially be forced to wait seven days before they sign final loan documents causing them to potentially close late on their escrow or possibly even have to pay to extend their interest rate lock.
While it is never a good idea for a borrower to sign their disclosures from their mortgage lender haphazardly during the mortgage transaction, you should prioritize emails from your lender to keep your loan progressing towards a timely closing.
If you have any questions, reach out to your loan officer immediately to address them or you can reach out to our office directly at (760) 930-0569.