Closing Disclosure Review Guide

The Closing Disclosure (CD) is one of the most important documents in your home-buying process. Understanding how to review it properly can save you from costly errors and ensure a smooth closing. This guide will help you master the CD review process, understand the 3-day rule, and identify potential issues before they become problems.

What is the Closing Disclosure (CD)
The 3-Day Review Rule and Timing Requirements
Key Sections You Must Review Carefully
Common Errors and How to Spot Them
Working with Your Lender and Escrow
What to Do When You Find Issues
Final Review Checklist and Tips
Summary

What is the Closing Disclosure (CD)

The Closing Disclosure is a standardized form that provides a complete breakdown of your loan terms and closing costs, required by federal law for most residential mortgage transactions.

Purpose and Requirements

Federal requirement: Required by TRID (TILA-RESPA Integrated Disclosure) rules
Complete transparency: Shows all costs and terms in one document
Consumer protection: Prevents surprise costs at closing
Legal document: Becomes part of your loan file
Comparison tool: Can compare with your Loan Estimate

What the CD Contains

Loan terms: Interest rate, monthly payment, loan amount
Closing costs: All fees and charges broken down by category
Cash-to-close: Total amount you need to bring to closing
Loan calculations: Amortization schedule and payment breakdown
Contact information: All parties involved in the transaction

TRID Rules Overview

TILA: Truth in Lending Act requirements
RESPA: Real Estate Settlement Procedures Act
Integrated disclosure: Combines previous separate forms
Timing requirements: Specific delivery and review periods
Change restrictions: Limits on changes after disclosure

Washington-Specific Considerations

State requirements: Additional Washington-specific disclosures
Local fees: Washington-specific closing costs and taxes
Escrow process: Washington escrow requirements and timing
Recording requirements: County-specific recording fees and procedures

Washington's specific regulatory environment may create unique disclosure requirements that require understanding of local legal requirements and regulatory frameworks.

The 3-Day Review Rule and Timing Requirements

Understanding the 3-day rule is crucial for ensuring you have adequate time to review your CD and address any issues.

3-Day Rule Requirements

Delivery timing: CD must be delivered at least 3 business days before closing
Business days: Excludes weekends and federal holidays
Delivery methods: Electronic delivery, hand delivery, or mail
Consumer acknowledgment: You must acknowledge receipt
Clock starts: 3-day period begins when you acknowledge receipt

What Triggers the 3-Day Rule

Initial CD: First delivery of the Closing Disclosure
Changed circumstances: Material changes to loan terms
Rate lock changes: Interest rate modifications
Product changes: Loan program or type changes
Cost increases: Significant increases in closing costs

Timing Calculations

Business day definition: Monday through Friday, excluding federal holidays
Delivery methods: Electronic delivery is fastest
Acknowledgment timing: Respond quickly to start the clock
Buffer time: Build in extra time for unexpected issues
Closing coordination: Ensure adequate time for review and corrections

Washington Market Considerations

Competitive markets: May require faster processing
Seasonal factors: Peak season may affect timing
Local practices: Washington-specific timing requirements
Professional coordination: Local agent and lender relationships

Washington's competitive market conditions may create specific timing challenges that require understanding of regional market dynamics and professional coordination requirements.

Common Timing Issues

Late delivery: CD delivered too close to closing
Acknowledgment delays: Slow response to CD delivery
Change requirements: Material changes requiring re-disclosure
Processing delays: Lender or escrow processing issues
Document preparation: Time needed for corrections

Key Sections You Must Review Carefully

Thorough review of each section helps you identify errors and understand your total costs.

Loan Information Section

Loan amount: Verify matches your expectations
Interest rate: Confirm rate lock and terms
Monthly payment: Check principal, interest, taxes, insurance
Loan term: Verify 15, 20, or 30-year term
Loan type: Confirm conventional, FHA, VA, or other

Projected Payments Section

Principal and interest: Monthly loan payment
Property taxes: Monthly tax escrow amount
Insurance: Monthly insurance escrow amount
PMI: Private mortgage insurance if applicable
Total payment: Sum of all monthly costs

Costs at Closing Section

Closing costs: Total of all fees and charges
Down payment: Your equity contribution
Funds for borrower: Additional amounts you need
Seller credits: Any seller contributions
Adjustments: Prorated taxes, insurance, HOA fees

Loan Costs Breakdown

Origination charges: Lender fees and charges
Services you cannot shop for: Required services
Services you can shop for: Optional services
Total loan costs: Sum of all loan-related charges
Other costs: Title, escrow, government fees

Calculating Cash-to-Close

Total closing costs: All fees and charges
Down payment: Your equity contribution
Prepaid items: Taxes, insurance, interest reserves
Escrow funding: Initial escrow deposits
Minus credits: Seller or lender contributions

Washington-Specific Cost Review

Real Estate Excise Tax (REET): 1.28% of purchase price
County recording fees: Vary by county
Title insurance: Owner and lender policies
Escrow fees: Settlement and coordination charges
Property taxes: Prorated based on closing date

Washington's specific tax structure and fee requirements may create unique cost considerations that require understanding of local regulations and fee structures.

Common Errors and How to Spot Them

Knowing what to look for helps you catch errors before they become problems.

Mathematical Errors

Addition mistakes: Incorrect totals in cost sections
Percentage calculations: Wrong tax or fee calculations
Proration errors: Incorrect tax or insurance prorations
Escrow calculations: Wrong escrow funding amounts
Cash-to-close errors: Incorrect total amount needed

Information Discrepancies

Property details: Wrong address or legal description
Loan terms: Different rate, term, or loan amount
Personal information: Incorrect names or contact details
Dates: Wrong closing date or rate lock expiration
Contact information: Incorrect lender or escrow details

Cost Variations

Fee increases: Higher fees than originally quoted
Missing credits: Seller credits not included
Double charges: Fees charged multiple times
Wrong categories: Fees in wrong cost sections
Unauthorized fees: Charges not previously disclosed

Timing Issues

Rate lock expiration: Rate lock expires before closing
CD delivery timing: Not delivered 3 business days before closing
Acknowledgment timing: Delays in starting 3-day clock
Change notifications: Material changes not properly disclosed
Closing delays: Insufficient time for corrections

Washington-Specific Errors

REET calculations: Wrong tax amount or who pays
County fees: Incorrect recording or transfer fees
Title insurance: Wrong policy types or amounts
Escrow requirements: Missing Washington-specific requirements
Property taxes: Incorrect proration or assessment

Washington's specific regulatory requirements and fee structures may create unique error patterns that require understanding of local requirements and procedures.

Red Flags to Watch For

Significant cost increases: More than 10% above Loan Estimate
Missing information: Incomplete sections or details
Unfamiliar fees: Charges not previously explained
Timing violations: CD delivered too close to closing
Communication issues: Lender or escrow not responsive

Working with Your Lender and Escrow

Effective communication with your lender and escrow company is essential for resolving issues quickly.

Lender Communication

Primary contact: Know your loan officer's contact information
Response expectations: How quickly they should respond
Escalation process: Who to contact if issues arise
Documentation: Keep records of all communications
Timeline coordination: Ensure adequate time for corrections

Escrow Company Coordination

Primary contact: Know your escrow officer's information
Document flow: How documents are processed
Timing requirements: Escrow processing timelines
Fee verification: Confirm all escrow fees are correct
Closing coordination: Final steps and requirements

Communication Best Practices

Document everything: Keep records of all communications
Ask questions: Don't hesitate to seek clarification
Follow up: Proactive communication about issues
Escalate problems: Know when and how to escalate
Maintain relationships: Professional communication throughout

Washington-Specific Coordination

Local relationships: Lender and escrow local market knowledge
County requirements: Understanding of local procedures
Timing coordination: Washington-specific timing requirements
Fee verification: Local fee structures and requirements
Professional network: Local real estate professional relationships

Washington's competitive market conditions may require specific coordination approaches that reflect local market dynamics and professional relationships.

Technology and Portals

Online access: Lender and escrow online portals
Document sharing: Electronic document exchange
Progress tracking: Real-time updates on status
Communication tools: Integrated messaging systems
Mobile access: Ability to manage from mobile devices

What to Do When You Find Issues

Having a plan for addressing issues helps you resolve them quickly and avoid closing delays.

Immediate Actions

Document the issue: Write down exactly what's wrong
Contact lender: Notify lender immediately of problems
Request correction: Ask for corrected CD if needed
Verify timing: Ensure adequate time for corrections
Escalate if needed: Contact supervisor if not responsive

Common Issue Resolution

Mathematical errors: Request corrected calculations
Missing information: Ask for complete disclosure
Cost increases: Request explanation and justification
Timing violations: Insist on proper 3-day review period
Communication problems: Escalate to management

Documentation Requirements

Issue description: Clear explanation of the problem
Supporting evidence: Documents supporting your position
Communication records: Records of all conversations
Timeline documentation: When issues were identified
Resolution tracking: How and when issues were resolved

Escalation Process

First level: Loan officer or escrow officer
Second level: Supervisor or manager
Third level: Senior management or compliance
External resources: State regulatory agencies if needed
Legal counsel: Attorney consultation for serious issues

Washington-Specific Resolution

State regulations: Washington-specific requirements
Local practices: Understanding of local procedures
Professional relationships: Local real estate professional network
Regulatory agencies: Washington state agencies for complaints
Legal resources: Local real estate attorneys

Washington's specific regulatory framework may create unique resolution processes that require understanding of local legal requirements and professional networks.

Timing Considerations

3-day rule: Ensure adequate review time
Closing date: Allow time for corrections
Rate lock: Consider rate lock expiration
Market conditions: Impact of delays on transaction
Seller considerations: Effect on seller's plans

Final Review Checklist and Tips

A systematic approach to your final review ensures nothing is missed.

Pre-Review Preparation

Gather documents: Loan Estimate, rate lock confirmation, other disclosures
Set aside time: Dedicate uninterrupted time for review
Prepare questions: List any concerns or questions
Have calculator ready: For checking mathematical accuracy
Contact information: Have lender and escrow contact details

Section-by-Section Review

Loan information: Verify all loan terms are correct
Payment calculations: Check monthly payment breakdown
Cost breakdown: Review all fees and charges
Cash-to-close: Confirm total amount needed
Contact information: Verify all parties' contact details

Mathematical Verification

Addition checks: Verify all totals are correct
Percentage calculations: Check tax and fee calculations
Proration verification: Confirm tax and insurance prorations
Escrow funding: Verify escrow account calculations
Final amount: Confirm cash-to-close calculation

Washington-Specific Verification

REET calculation: Verify 1.28% tax amount
County fees: Confirm recording and transfer fees
Title insurance: Verify owner and lender policies
Escrow fees: Confirm settlement and coordination charges
Property taxes: Verify proration calculations

Washington's specific tax and fee structures may require specialized verification approaches that reflect local regulatory requirements and fee structures.

Final Steps

Acknowledge receipt: Respond to CD delivery promptly
Document issues: Keep records of any problems found
Request corrections: Ask for corrected CD if needed
Confirm timing: Ensure adequate review time
Prepare for closing: Have all documents and funds ready

Professional Assistance

Real estate agent: Help with review and coordination
Loan officer: Clarify any loan-related questions
Escrow officer: Explain escrow and closing process
Real estate attorney: Legal review if needed
Financial advisor: Review financial implications

Summary

Mastering your Closing Disclosure review is essential for a successful home closing. By understanding the 3-day rule, carefully reviewing all sections, identifying common errors, and working effectively with your lender and escrow company, you can avoid costly mistakes and ensure a smooth closing process.

Remember that the CD is your final opportunity to review and understand all the costs and terms of your loan before closing. Take the time to review it thoroughly, ask questions about anything unclear, and insist on corrections for any errors you find. Your future self will thank you for the attention to detail and thorough preparation that leads to a successful closing and smooth transition to homeownership.