Closing Disclosure: Itemized Costs and the Three-Day Rule

A Closing Disclosure is the five-page form your lender must give you before you sign a mortgage. It lists your final loan terms, your monthly payment, every closing cost, and the exact dollar amount you need to bring to the settlement table. It replaced the HUD-1 Settlement Statement for most home loans in October 2015, and federal rules require you to have it in hand at least three business days before closing so you can compare it against the Loan Estimate you received earlier and catch anything wrong.¹

What’s on Each Page

The form is standardized under the TILA-RESPA Integrated Disclosure rule, so every lender’s version looks the same.² Knowing which page holds what saves time when you sit down to review it.

Page 1 shows your loan terms, interest rate, monthly payment, and a summary of closing costs and cash to close.
Page 2 breaks down every closing cost, separated into loan costs and other costs, with columns showing who pays each charge.
Page 3 has the Calculating Cash to Close table and full summaries of the buyer’s and seller’s sides.
Page 4 covers late-payment penalties, whether the lender accepts partial payments, escrow account details, and whether the loan can be assumed by a future buyer.
Page 5 has total interest percentage, the annual percentage rate, and contact information for your lender, broker, and settlement agent.

The Costs Itemized on Page 2

Page 2 is where most errors hide. It splits into two sections.

Loan Costs

Loan costs are the fees tied directly to the mortgage itself, grouped three ways:

Origination charges are what the lender charges for processing, underwriting, and funding the loan. They often run 0.5% to 1% of the loan amount and can include discount points you bought to lower your rate.
Services you could not shop for are charges the lender required and picked the provider for, like the appraisal and credit report.
Services you could shop for are required services where you chose the provider, like title insurance, title search, and pest inspection. The CFPB has noted that borrowers who compare providers could save as much as $500 on title services alone.³

Other Costs

Other costs cover everything else you owe at closing: recording fees and transfer taxes charged by the government, prepaids like daily interest through month-end and your first year of homeowner’s insurance, an initial escrow deposit for future taxes and insurance, and miscellaneous items like survey fees, HOA fees, or notary fees.

Seller Credits and Cash to Close

If the seller agreed to cover part of your costs, each charge they pay is marked in the seller-paid column on page 2, and the total credit appears as a lump sum in the transaction summaries on page 3.⁴ The Calculating Cash to Close table on page 3 pulls it all together: it takes your total closing costs, subtracts deposits you already paid and any seller or lender credits, and gives you the exact amount to bring to closing. Most settlement agents want a cashier’s check, certified check, or wire transfer for that amount. Personal checks and cash generally aren’t accepted.

The Three-Business-Day Rule

Your lender has to make sure you receive the Closing Disclosure at least three business days before you sign the loan.² That window exists so you have time to read it.

Delivery can happen in person, by mail, or electronically. When the form is mailed, the law assumes you received it three business days after it went out, which pushes your total wait to roughly six business days before closing. Electronic delivery is only allowed if you gave prior written consent under the E-SIGN Act.⁵

Comparing It to the Loan Estimate

The Loan Estimate is the preview version. Your lender has to send it within three business days after you submit a loan application, and it uses the same categories and layout as the Closing Disclosure so you can compare the two line by line.⁶ The Loan Estimate is the projection; the Closing Disclosure is the final number.

Federal rules don’t let a lender lowball fees on the Loan Estimate and then charge more at closing. Costs fall into three tolerance categories:²

Zero tolerance, meaning no increase is allowed at all, applies to fees paid to the lender or its affiliates, fees for services you weren’t allowed to shop for, and transfer taxes.
Ten percent cumulative tolerance applies to recording fees and third-party services where you picked a provider from the lender’s preferred list. The group total can rise by no more than 10% above the estimate.
No fixed cap applies to prepaid interest, property insurance premiums, escrow deposits, property taxes, and services where you chose a provider on your own. The original estimate still has to reflect the best information the lender had at the time.

If the lender exceeds any of these limits, it must refund the difference and send you a corrected Closing Disclosure within 60 days after closing.⁷

Changes That Restart the Waiting Period

Once you have the Closing Disclosure, only three specific changes force the lender to issue a corrected form and start a new three-business-day wait:⁶

The APR becomes inaccurate compared to what was disclosed.
The loan product changes, for example a switch from a fixed-rate to an adjustable-rate mortgage.
A prepayment penalty is added when the loan didn’t have one before.

Other adjustments, like a small change in recording fees, don’t reset the clock. The lender issues a corrected form and closing proceeds as scheduled.

What to Do If You Find an Error

Read the Closing Disclosure the day you get it. Compare every figure to your most recent Loan Estimate. Look for misspelled names, wrong loan amounts, unexpected fees, and any charge that jumped beyond what the tolerance rules allow.

If you find something wrong before closing, contact your lender or settlement agent right away and ask for a corrected form. Confirm with the closing agent a few days before your scheduled date that everything is ready.⁸

If you find an error after closing, write to your lender and describe the problem. If that doesn’t resolve it, file a complaint with the Consumer Financial Protection Bureau online or by calling (855) 411-CFPB (2372). The CFPB forwards the complaint to the lender and typically works to get you a response within 15 days. When the problem is a tolerance violation that led to an overcharge, the lender has 60 days after closing to refund the excess and send a corrected Closing Disclosure.⁷

Transactions That Don’t Use This Form

Not every real estate deal produces a Closing Disclosure. Reverse mortgages use a Good Faith Estimate and a HUD-1 instead. Home equity lines of credit follow separate open-end credit disclosure rules. Manufactured or mobile home loans not secured by real property fall outside the TRID rule. Some subordinate loans through down-payment assistance programs are also exempt.⁹ All-cash purchases have no lender, so no federal disclosure is required at all; the settlement agent usually provides an ALTA Settlement Statement to itemize costs for both sides.

1
Consumer Financial Protection Bureau. Closing Disclosure Explainer
2
eCFR. 12 CFR 1026.19 – Certain Mortgage and Variable-Rate Transactions
3
Consumer Financial Protection Bureau. Shop for Title Insurance and Other Closing Services
4
eCFR. 12 CFR 1026.38 – Content of Disclosures for Certain Mortgage Transactions (Closing Disclosure)
5
Office of the Law Revision Counsel. 15 USC 7001 – General Rule of Validity
6
Consumer Financial Protection Bureau. TILA-RESPA Integrated Disclosure FAQs
7
Consumer Financial Protection Bureau. 1026.19 Certain Mortgage and Variable-Rate Transactions
8
Consumer Financial Protection Bureau. What Should I Do If I Find an Error in One of My Mortgage Closing Documents
9
Consumer Financial Protection Bureau. What Is a HUD-1 Settlement Statement