Closing Disclosure (CD)

The Closing Disclosure is organized into five distinct pages, each serving a specific purpose. Page 1 provides a loan summary including the loan amount, interest rate, monthly payment amount, whether the payment can adjust (for ARMs), whether prepayment penalties exist, and whether the loan has a negative amortization or balloon payment feature. It also displays the APR, Total Interest Percentage (TIP), and the total amount of closing costs financed. This page gives borrowers a high-level snapshot of their loan's key financial terms, all of which must match the Loan Estimate within applicable tolerances.

Page 2 itemizes closing costs in a standardized table with two columns: the amount on the Loan Estimate and the final amount on the CD. Costs are grouped by lender origination fees, services borrower did or did not shop for, taxes and government fees, prepaids (hazard insurance premiums, property tax escrows), initial escrow payments, and other costs. The CFPB defines three tolerance categories: zero tolerance fees (origination charges, points, transfer taxes) that cannot increase at all from the LE; 10% tolerance fees (third-party services, recording fees) where total increases within this category cannot exceed 10%; and no tolerance fees (services not shopped for, homeowners insurance, property taxes) where increases have no regulatory limit but must still be disclosed. The total closing cost comparison box at the bottom of the table shows both the estimated and actual totals across each tolerance category.

Page 3 details the loan terms and projected payments, showing how the monthly payment breaks down by principal, interest, mortgage insurance (if applicable), and escrow amounts. It includes a table showing total payments over five years, total principal paid, total interest paid, and the remaining balance. This page also discloses whether the loan is assumable and whether it includes a demand feature or negative amortization. Page 4 lists transaction information including seller disclosures, the contract price, and prorated taxes and assessments. Page 5 provides contact information for all parties involved: the lender, the mortgage broker, the settlement agent, and the appraiser. It also includes a comparison table showing the APR, Total Interest Percentage, and total finance charge alongside the Loan Estimate figures, giving borrowers a final cross-check against the loan terms they originally applied for.

The Closing Disclosure serves as the borrower's final protection against predatory lending and hidden fees. The three-business-day waiting period is a mandatory cooling-off window — if the CD is delivered less than three business days before closing, the borrower has the legal right to delay closing. This right extends fair lending protections under the Equal Credit Opportunity Act (ECOA) by giving borrowers time to spot discriminatory pricing, undisclosed markups, or fee disparities. The CD replaces the old HUD-1, which was often delivered at the closing table, forcing borrowers to make rushed, uninformed decisions. The CFPB estimates the TRID rule saves American borrowers approximately $8 billion annually through reduced settlement costs and increased shopping transparency.

Borrowers should use the CD to verify three critical items. First, confirm the loan terms (amount, rate, monthly payment) match what you agreed to in the Loan Estimate. Second, verify the total cash to close — this is the exact amount you must bring via certified funds, and any discrepancy could delay closing. Third, check for changed circumstances. Lenders are permitted to change certain fees only if a valid changed circumstance occurred — such as a new appraisal revealing an issue, a rate lock expiration, or a change in the loan program. Any fee increase without a documented changed circumstance should be challenged. If the borrower discovers errors during the review period, the lender must issue a corrected CD and potentially restart the three-business-day waiting period if the APR changes by more than 0.125%, the loan product changes, or a prepayment penalty is added.