A closing disclosure form outlines the terms and costs that you incur in your mortgage. It is among the important pieces of documents that you must always check before you decide to close on a home.
The lender must it the closing disclosure form available at least three business days before any closing deal is met. You need to ensure you read this document thoroughly before you come to any agreement and sign any paperwork.
Closing disclosure vs settlement statement
The closing disclosure form was known as the HUD-1 settlement statement before August 1st, 2015. In the past, it used to be a very long and confusing document that was only available to the buyer on the day of closing, as required by federal law. This did not give the buyer much time to address issues within the document. It is for this reason that the closing disclosure statement form later replaced the settlement statement. And new and a fewer number of strict laws were implemented in the form, such as lenders providing the five-page document three business days before the closing date.
Even so, this document can still be a little confusing. Here are some few tips you can look at to make the process easier for you.
Comparing your closing disclosure with your loan estimate
You will always want to compare the amount you use with the amount that is in your loan estimate. The numbers and terms should match up or come close in both forms. You may realize that there are some changes as a result of the period that has gone by from the time you applied for a loan.
Your mortgage rates may have changed over the time too, and the attorneys or the title company changed their rates as well, most likely nudging the rates up. What you will especially want to keep an eye out for are the spelling errors and typos that can occur in numbers and names.
A study showed that half of the real estate agents have, at one point, found errors in closing disclosure statements. So, to be on the safe side, it wouldn’t hurt to check for any misspelling and typo errors. In fact, you may end up saving yourself a lot of trouble in future. Wherever you don’t understand the document, it is advisable that you seek the advice of your real estate agent. It is vital that you notify your closing company, lender and title of any changes that may be troubling you immediately.
What to check in your closure disclosure form
- Your name – check the spelling of your name
- Loan term – this is always somewhere between 15 and 30 years.
- Loan type – know the type of loan you should go for
- Interest rate – locked in rates will always remain fixed
- Closing costs – these are the fees that are paid to the third parties that took part in the process to close the deal
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