Reviewing a Closing Disclosure* can make a big difference in your real estate process. Learn how to do it thoroughly through this post by Burchard Abstract Company in Gonzales, TX*.

A Closing Disclosure is one of the most important documents in a real estate transaction. It outlines all the financial details of your loan and finalizes the terms of the mortgage before the closing.

By law, the lender must provide the Closing Disclosure at least three business days before the scheduled closing. Carefully reviewing it during this time is crucial to ensure there are no surprises and that all information aligns with your expectations. Here’s a step-by-step guide on how to review a Closing Disclosure.

If you need assistance through your closing process, call Burchard Abstract Company in Gonzales, TX at (830) 672-8651 for experienced guidance.

How to Review a Closing Disclosure

1. Verify Basic Loan Information

The first section of the Closing Disclosure provides an overview of your loan details. Check the following to ensure everything matches the terms you agreed to:

• Loan Amount: Make sure the loan amount is accurate.
• Interest Rate: Confirm that the interest rate is the same as the one agreed upon in your loan agreement.
• Monthly Payment: Review your monthly principal and interest payments, making sure they align with your expectations.
• Loan Term: Ensure that the length of your loan (15, 20, or 30 years, for example) is correct.

This section also outlines whether the interest rate is fixed or adjustable. If you opted for an adjustable-rate mortgage (ARM), make sure the terms for adjusting the interest rate are as agreed.

2. Confirm the Projected Payments

The "Projected Payments" section shows how your monthly mortgage payment might change over time, especially if you have an ARM or a loan with taxes and insurance included. It usually breaks down into three parts:

• Principal and Interest: Your core payment for the loan.
• Mortgage Insurance: This is required if your down payment was less than 20%.
• Escrow Payments: Check if your taxes and insurance are included in escrow, meaning the lender will collect and pay these bills on your behalf.

Make sure these projected payments align with what you’ve been told throughout the loan process.

3. Understand Closing Costs

The "Costs at Closing" section is critical. It breaks down your closing costs and the cash needed to close the transaction. Closing costs typically include lender fees, appraisal fees, title insurance, and more.

Pay close attention to the following:

• Origination Charges: Fees charged by the lender for processing the loan.
• Title Insurance: This protects you and the lender from any issues with the property title.
• Prepaid Costs: These include items like homeowners insurance and property taxes that you might need to pay upfront.

Compare these costs to the Loan Estimate you received earlier in the process. If there are any significant changes, ask the lender to explain the differences.

4. Review the Cash to Close

At the bottom of the "Costs at Closing" section, you’ll find the Cash to Close amount. This is the total amount you need to bring to the closing, including your down payment and all fees. Confirm that this amount matches what you expected based on earlier estimates. If it’s significantly higher, contact your lender to understand why.

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5. Compare the Loan Estimate and Closing Disclosure

One of the most important steps in reviewing your Closing Disclosure is comparing it to the Loan Estimate you received when you first applied for the mortgage. While some costs are allowed to change, such as appraisal or third-party service fees, others—like lender fees—should remain the same or have only minor adjustments. Ensure there are no unexpected increases and that any changes are within the legal limits.

6. Check Important Dates and Penalties

The Closing Disclosure includes key dates that are important to know, such as:

• First Payment Date: When your first mortgage payment is due.
• Late Payment Penalty: The fee you’ll be charged if you’re late on payments.
• Prepayment Penalty: If applicable, this is a fee for paying off your mortgage early. Ensure that the terms for prepayment penalties align with what you expected, as not all loans have them.

7. Double-Check Escrow Account Information

If your lender is setting up an escrow account to manage property taxes and insurance, confirm how much is being collected for these accounts. The amount should match what your insurance provider and tax assessments suggest.

8. Contact Your Lender With Any Questions

If you spot any discrepancies or have questions about fees, terms, or conditions, don’t hesitate to reach out to your lender. The three-day period before closing gives you time to resolve any issues or clarify any confusing details.

Call Burchard Abstract Company in Gonzales, TX at (830) 672-8651 to be sure your investment will remain safe through the complex real estate transactions you go into.