Closing Disclosure: Itemized Costs, Three-Day Rule, and Errors

The Closing Disclosure is the five-page federal form your lender must give you before you finalize a mortgage, listing the final loan terms, interest rate, monthly payment, and every closing cost you owe at settlement. It replaced the HUD-1 Settlement Statement for most residential mortgages in October 2015 and is required under the TILA-RESPA Integrated Disclosure (TRID) rule for closed-end mortgage loans secured by real property.¹ The form takes the preliminary numbers from your Loan Estimate and replaces them with the actual dollar amounts you will pay.

What Each Page Covers

The five pages are standardized, so once you know where to look, you can find any number quickly.²

Page 1 shows your loan terms, interest rate, monthly payment, and a summary of closing costs and cash to close.
Page 2 itemizes every closing cost, split between loan costs and other costs, with columns showing who paid each charge.
Page 3 holds the Calculating Cash to Close table and full summaries of both the buyer’s and seller’s sides.
Page 4 lists additional loan details: late-payment penalties, whether partial payments are accepted, escrow account information, and whether the loan is assumable.
Page 5 shows total cost calculations, including total interest percentage and APR, along with contact information for the lender, broker, and settlement agent.

The Itemized Costs

Page 2 is where you spend most of your review time. It divides the charges into Loan Costs and Other Costs, and each line shows whether you, the seller, or someone else is paying it.

Loan Costs

Origination charges are what the lender charges to process, underwrite, and fund the loan. These often run 0.5% to 1% of the loan amount and may include discount points you bought to lower your interest rate.

Services you could not shop for are items the lender required and selected for you, such as the appraisal or credit report.

Services you could shop for are items the lender required but let you pick the provider for, such as title insurance, title search, and pest inspections. Comparing providers matters here. The CFPB has noted that borrowers who shop around could save as much as $500 on title services alone.³

Other Costs

Government fees cover recording charges to file the deed and mortgage, plus any transfer taxes on the sale. Prepaids are upfront amounts for things that start accruing before your first payment: daily interest through the end of the month, your first year of homeowner’s insurance, and the initial deposit into your escrow account for property taxes and insurance. Miscellaneous items like survey fees, HOA fees, and notary fees land in the “Other” bucket.

Seller Credits and Cash to Close

If the seller agreed to cover part of your closing costs, each charge the seller is paying is marked in the seller-paid column on page 2, and the total seller credit appears as a lump sum in the transaction summaries on page 3.⁴ The Calculating Cash to Close table on page 3 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 settlement. Most settlement agents accept cashier’s checks, certified checks, or wire transfers for this amount; personal checks and cash are generally not recommended and may not be accepted.

The Three-Business-Day Rule

Your lender must make sure you receive the Closing Disclosure at least three business days before you sign the loan.¹ That window exists so you have time to compare each line against your Loan Estimate before anything is final.

Delivery can be in person, by mail, or electronically. If the form is mailed, the law assumes you received it three business days after it went out, which effectively pushes the full wait to six business days before closing. Electronic delivery requires your prior written consent under the Electronic Signatures in Global and National Commerce Act.⁵

Changes That Restart the Clock

Three specific changes between the first Closing Disclosure and signing force a new three-day waiting period with a corrected form:⁶

The APR becomes inaccurate compared to what was disclosed.
The loan product changes, such as a switch from a fixed-rate mortgage to an adjustable-rate mortgage.
A prepayment penalty is added when there was not one before.

Smaller adjustments, like a change in recording fees, don’t restart the waiting period. The lender can issue a corrected disclosure without a new wait as long as none of the three triggers above apply.

How Final Costs Are Held to the Loan Estimate

The Loan Estimate your lender sent within three business days of your application is more than a preview.⁶ It sets a legal baseline for what your Closing Disclosure can show. Fees fall into three tolerance categories:¹

Zero tolerance: fees paid to the lender or its affiliates, fees for services you were not allowed to shop for, and transfer taxes. The final amount cannot exceed the estimate.
Ten percent cumulative tolerance: recording fees and fees for third-party services you shopped for from the lender’s preferred list. The total of this group can rise no more than 10% above the estimated total.
No fixed limit: prepaid interest, property insurance premiums, escrow deposits, property taxes, and services from a provider you chose on your own. These can change, but the lender’s original estimate must still have reflected the best information available at the time.

If the lender exceeds a tolerance limit, it must refund the difference and send you a corrected Closing Disclosure within 60 days after closing.⁷

When the Closing Disclosure Doesn’t Apply

A few mortgage types fall outside TRID and use the older HUD-1 Settlement Statement or separate Truth in Lending disclosures instead:⁸

Reverse mortgages, which use a Good Faith Estimate and HUD-1.
Home equity lines of credit, which follow open-end credit disclosure rules.
Manufactured or mobile home loans not secured by real estate.
Certain subordinate loans provided through homebuyer assistance programs.

All-cash purchases with no lender aren’t covered by any federal Closing Disclosure requirement. In those deals, the settlement agent typically provides a settlement statement to itemize costs for both sides.

What to Do If You Find an Error

Read the Closing Disclosure the day it arrives. Compare every figure to your most recent Loan Estimate. Flag misspelled names, incorrect loan amounts, fees you don’t recognize, and any charge that jumped beyond what the tolerance rules allow.

If you catch something before closing, call your lender or settlement agent right away and ask for a correction. Confirm with your closing agent a few days before the scheduled date that every document is ready.⁹ Early is better; corrections at the signing table cause delays.

After closing, you still have options. 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 at (855) 411-CFPB (2372). The CFPB forwards your complaint to the lender and typically works to get you a response within 15 days. For tolerance violations that caused overcharges, the lender has 60 days after closing to refund the excess and issue a corrected Closing Disclosure.⁷

1
eCFR. 12 CFR 1026.19 – Certain Mortgage and Variable-Rate Transactions
2
Consumer Financial Protection Bureau. Closing Disclosure Explainer
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 Is a HUD-1 Settlement Statement
9
Consumer Financial Protection Bureau. What Should I Do If I Find an Error in One of My Mortgage Closing Documents