Loan Estimate and Closing Disclosure

#When you get each form

1. 1

   Apply

   For these rules, an application means six pieces of information: your name, income, Social Security number, the property address, an estimate of its value and the loan amount. Until you have the Loan Estimate and say you want to go ahead, a lender may charge only a reasonable fee for your credit report.

2. 2

   Receive the Loan Estimate

   The lender must deliver or mail it within 3 business days of your application, and no later than 7 business days before closing.

3. 3

   Say you intend to proceed

   Tell the lender you want to go ahead, in any way it accepts. If you wait more than 10 business days, or longer if the lender allows, it can issue a new estimate with different costs.

4. 4

   Revisions, if something changes

   When a valid change occurs — you change the loan amount, the appraisal comes in low, you lock the rate — the lender must send a revised Loan Estimate within 3 business days of learning about it.

5. 5

   Receive the Closing Disclosure

   You must have it at least 3 business days before closing.

6. 6

   Close

   Compare the final figures with your last Loan Estimate before you sign.

For the closing waiting periods, a business day generally means every day except Sundays and federal public holidays. You can shorten the Closing Disclosure wait only for a genuine personal financial emergency, such as a foreclosure sale, with a signed statement.

Pre-approval usually comes before you have an address, so you may not get a Loan Estimate until you apply on a specific home — see mortgage pre-approval.

#What can change — the tolerance rules

The Loan Estimate is a good-faith estimate, and federal rules sort every charge into one of three groups:

Charges can exceed these limits only after a valid change in circumstances or in your application, documented on a revised Loan Estimate. If the lender exceeds a tolerance without one, it must refund the difference after closing. The closing costs guide explains each lettered section the groups refer to, and the closing cost estimator shows the state taxes that land in section E.

#The three-day rule on the Closing Disclosure

Most corrections can be made on a revised Closing Disclosure at or before closing without delaying it. Three changes give you a fresh 3 business days before you can close:

• The APR becomes inaccurate — for a regular loan, it rises by more than 0.125%;
• The loan product changes — for example, from a fixed rate to an adjustable rate;
• A prepayment penalty is added.

#How to compare Loan Estimates page by page

Ask two or three lenders for Loan Estimates on the same day, for the same loan type, term, down payment and lock period. Mortgage credit checks within 45 days count as one inquiry, so shopping won’t cost you more than one hit to your score.

Page 1 — the loan. Check the loan amount, rate, monthly principal and interest, and whether there is a prepayment penalty or balloon payment. Projected payments show mortgage insurance and escrow, and the costs-at-closing box shows estimated closing costs and cash to close. The rate lock box says whether the rate is locked and when estimated closing costs expire.

Page 2 — the costs. Compare section A first: it holds the lender’s own fees and any points, and it is the part one lender can undercut another on. Then check the shoppable services in section C, prepaid items in F, and lender credits in J. See mortgage points to weigh points against credits.

Page 3 — the comparisons. This section sums up the cost of the loan in a few standard measures:

A lower rate with high section A costs can lose to a slightly higher rate with low costs if you will move or refinance within a few years — the In 5 Years figure catches that. How mortgage rates work explains why quotes differ.

#Review the Closing Disclosure

• Match the loan terms — amount, rate, product, monthly payment — to your latest Loan Estimate.
• Compare each section of closing costs and check that lender credits and seller credits appear.
• Confirm your earnest money is credited and the cash to close makes sense.
• Check names, the property address and the escrow figures.
• Confirm wiring instructions by phone with a number you already know; never trust instructions sent only by email.

If something is wrong or unexplained, ask before closing day. The buying a home hub shows where both forms fall in the purchase, and the same forms apply to FHA loans.