Closing Disclosure Explained: Read Your CD Line by Line

When you’re days away from closing, one document becomes the most important in your entire homebuying journey: the Closing Disclosure (or “CD”).

It’s the final, official breakdown of your loan terms, monthly payments, fees, and closing costs — all laid out in black and white.

But here’s the catch: it’s five dense pages of legal and financial jargon. Understanding it line by line ensures you’re not overpaying, missing hidden fees, or walking into surprises at the closing table.

This guide walks you through every section — what to check, what’s normal, and what could be a red flag so you can close with confidence.

Key Takeaways

✅ The Closing Disclosure shows your final loan terms and closing costs — compare it carefully to your Loan Estimate.

✅ Review for accuracy: loan amount, interest rate, monthly payment, and total cash needed to close.

✅ Watch for differences between your Loan Estimate and Closing Disclosure — small changes can cost thousands.

✅ You’re legally entitled to receive your CD at least 3 business days before closing.

💡 Pro Tip: After you apply for a loan and receive your initial Loan Estimate (the primary disclosure lenders must send), upload it to Fincast — we let lenders view your Loan Estimate and compete by offering better rates or lower fees. Do this as soon as possible to give you time to find the best deal long before you need to head to the closing table.

What Is a Closing Disclosure? 📄

The Closing Disclosure (CD) is a five-page standardized form you’ll receive from your lender at least three business days before closing.

It replaces the old HUD-1 settlement statement and is designed to help you clearly understand your loan terms and closing costs before signing.

Your lender must issue this document by law — use those three days to review it carefully and ask questions.

💡 Pro Tip: Pull out your Loan Estimate and compare side-by-side to your Closing Disclosure. If key numbers like your interest rate, loan amount, or cash-to-close amount change, you deserve an explanation. Learn more in What Is a Loan Estimate (and How to Read It).

Page 1: The Big Picture Summary 🏡

This is your financial snapshot — the numbers that matter most.

1️⃣ Loan Terms

• Loan Amount: The total amount you’re borrowing. Make sure it matches what you expected.

• Monthly Principal & Interest: Your base mortgage payment before taxes, insurance, and HOA.

• Prepayment Penalty: Check if there’s a penalty for paying off your loan early — and avoid those that do.

• Balloon Payment: These loans have large final payments; consider them only if you fully understand the risks.

💡 Tip: Compare these numbers with your Loan Estimate. Any increase in loan amount or interest rate should have been disclosed earlier — and justified.

2️⃣ Projected Payments

This section shows your estimated monthly payment over time.

• Year 1–7 vs. 8–30: If your payment changes, it means you have an adjustable-rate mortgage (ARM) or a tax/insurance adjustment.

• Escrow: This indicates whether taxes and insurance are included in your monthly payment.

💡 Pro Tip: If you don’t have an escrow account to cover your taxes and insurance payments, set up automatic savings to avoid a surprise bill later.

3️⃣ Costs at Closing

A simple summary of two key numbers:

• Closing Costs: Total of all lender, third-party, and prepaid fees.

• Cash to Close: The final dollar amount you need to bring to closing.

For a detailed breakdown, flip to Page 2 — where we’ll go line by line.

Page 2: The Closing Cost Breakdown 💰

Here’s where your money actually goes. This page lists every fee — yours and the seller’s — broken into sections (A through J).

Section A: Origination Charges

These are lender fees, and the most negotiable.

Includes:

• Application or underwriting fees

• Origination or processing fees

• Discount points (optional fees to lower your interest rate)

💡 Pro Tip: This is the section where lenders compete. Upload your Loan Estimate to Fincast and see if vetted lenders can offer more competitive pricing or lower fees. Fincast doesn’t pull your credit to offer this service, and your information is shared anonymously, so you don’t have to worry about spam calls.

Section B: Services You Cannot Shop For

These are third-party services your lender chooses.

Examples:

• Appraisal fee

• Credit report

• Flood certification

• Tax service fee

They should closely match your Loan Estimate. If they increased significantly, ask why.

Section C: Services You Can Shop For

Many borrowers don’t realize they have the option to shop for certain services, some examples:

• Title insurance (lender’s and owner’s)

• Settlement or closing agent fees

• Pest inspection (in some states)

💡 Tip: You can save by shopping for your own title company, but compare quotes early in the process so you can meet your contract deadlines.

Section D: Total Loan Costs

Adds up Sections A, B, and C. This is your total cost of getting the loan itself. If it’s higher than your Loan Estimate, ask your lender for a written explanation.

Section E–H: Other Costs

Includes prepaid and ongoing costs not paid to your lender directly:

• E: Taxes & Prepaids: Homeowners insurance premium, property taxes, prepaid interest.

• F: Initial Escrow Payment: Money held by the lender to pay taxes/insurance later.

• G: Other: Home warranty, HOA transfer fees, or optional services.

Section J: Total Closing Costs

The grand total — loan costs + other costs. On average, total closing costs are around 2–5% of the purchase price. See our guide: Understanding Closing Costs — and How to Negotiate Them.

Page 3: Calculating Cash to Close 💵

This is your “bottom line.” It shows how total costs translate into the cash you must bring to closing day.

Key items to check:

• Deposit: Earnest money already paid.

• Down Payment: The amount you’re putting down.

• Loan Amount: The amount you are borrowing.

• Seller Credits or Lender Credits: These reduce what you owe.

• Cash to Close: The final amount you’ll wire or bring via cashier’s check.

💡 Tip: Double-check wire instructions directly with your title company to avoid fraud. (Never trust emailed wire details.)

Page 4: Loan Disclosures ⚖️

This section outlines the fine print of your loan:

• Assumption: Can the buyer take over your mortgage if you sell?

• Demand Feature: Rare, but allows the lender to require full payment early.

• Late Payment: The average lender charges a 5% penalty of the monthly payment.

• Negative Amortization: This can cause your balance to grow over time, so be cautious with these terms.

• Partial Payments: Clarifies whether your lender accepts partial monthly payments.

💡 Pro Tip: This section should have no surprises. Anything new here is a red flag — ask your lender for clarification.

Page 5: Loan Calculations & Contact Info 🧾

The final page includes key totals and your lender’s contact info.

Loan Calculations

• Total of Payments: The total amount you’ll pay over the life of the loan.

• Finance Charge: The total cost of credit (interest + fees).

• Amount Financed: Your loan amount minus prepaid finance charges.

• APR (Annual Percentage Rate): The true cost of borrowing — compare it to your Loan Estimate.

• Total Interest Percentage (TIP): How much interest you’ll pay as a percentage of the loan.

💡 Tip: Even a 0.25% lower APR could save you tens of thousands over 30 years. Compare with How to Compare Mortgage Rates and Lenders Like a Pro.

Contact Information

This section lists your lender, mortgage broker, real estate agents, and settlement agent. Keep this for your records — it’s your official paper trail.

Red Flags to Watch For ⚠️

🚫 Higher fees than your Loan Estimate — without explanation

🚫 Interest rate increases you don’t know about

🚫 New prepayment penalty or balloon payment

🚫 Missing seller credits or concessions

🚫 Large increase in cash to close

If you spot any of these, contact your lender immediately and postpone closing until they are resolved.

How Fincast Helps You Save Before the Closing Table 🚀

By the time your Closing Disclosure arrives, you’re days away from signing — but your biggest opportunity to save happens before then.

Here’s how Fincast gives you the edge:

1️⃣ Complete a loan application and receive your Loan Estimate

2️⃣ Upload it securely to Fincast

3️⃣ Vetted lenders compete to beat your rate or reduce fees

4️⃣ Choose the best offer — and head to closing confident you’ve secured a competitive offer

FAQs

1. When should I get my Closing Disclosure?

At least three business days before closing — by law.

2. What if the numbers changed from my Loan Estimate?

Ask your lender why there are changes. Small differences happen, but large changes require explanation.

3. What’s the difference between the Loan Estimate and Closing Disclosure?

The Loan Estimate is an early estimate; the Closing Disclosure is the final, binding version of your loan terms and costs.

4. Can I still negotiate fees after receiving my CD?

Technically, yes, but it’s difficult so close to closing. That’s why it’s smart to compare offers early with your Loan Estimate using Fincast.

5. What if I find an error on my CD?

Notify your lender immediately — they must issue a corrected CD and restart the three-day review period if major changes occur.

Bottom Line

Your Closing Disclosure is the financial truth of your mortgage — every dollar, every fee, every term.

You’re ready to close when:

✅ You’ve uploaded your Loan Estimate to Fincast and found a competitive offer

✅ You’ve compared your Closing Disclosure to your Loan Estimate

✅ All loan terms and costs match what you agreed to

✅ You understand your total cash to close

Don’t just sign — understand what you’re signing because a few minutes of review can save you thousands.

Pro Tips (Save These!)

📋 Review your CD as soon as you receive it

🔍 Compare every line to your Loan Estimate

💰 Verify total cash to close and all credits

📞 Confirm wire instructions by phone

🚀 Upload your Loan Estimate to Fincast for potential savings

Action Checklist

• Upload your Loan Estimate to Fincast

• Receive your Closing Disclosure (3 days before closing)

• Compare to your Loan Estimate

• Review loan amount, rate, APR, and closing costs

• Confirm cash to close

• Contact your lender about any discrepancies

• Verify wire instructions with the title company

• Close confidently — and potentially save money with the better-priced loan

👉 Ready to understand your numbers — and make sure they work for you?

Upload your Loan Estimate to Fincast and let vetted lenders compete to lower your costs before you sign.