When you reach the final stages of closing on a mortgage loan and home purchase, the lender is required to provide a detailed Closing Disclosure form outlining all the final loan terms, fees, costs and other details associated with the transaction.
Buyers will typically sign the Closing Disclosure to formally acknowledge receipt during the mandated 3-day review period before closing. But after a buyer has already signed the initial Closing Disclosure, can changes still occur on the statement before the actual closing? Are any cost fluctuations or adjustments still possible at this stage?
Can closing disclosure change after signing?
Yes, the Closing Disclosure form can change after signing. These changes can be due to adjustments in prorations, title fees, or other costs. If there are significant changes, a new disclosure will be required and the closing may be delayed. However, as a buyer, you have options to protect your interests, such as locking in your interest rate or choosing not to close if you are uncomfortable with the changes. The lender is also limited in adjusting certain fees and amounts after the initial disclosure.
Key points on potential Closing Disclosure changes post-signing
It is most common that only minor changes occur, typically due to slight recalculations of tax prorations, prepaid interest, escrow account adjustments or minor modifications in the final loan amount after the last underwriting review.
Substantive changes are less likely but can certainly still happen even after initial signing. Any significant alterations do require the lender to issue an updated Closing Disclosure with an additional mandated 3-day waiting period before closing.
Lenders strive to provide the most accurate Closing Disclosure estimate possible to the buyer on the first version issued to minimize surprises, anxiousness or need for delays down the road. But unforeseeable events can affect figures.
The buyer does have the option to request rate lock to lock in the interest rate and associated prepaid costs used on the initial Disclosure to maintain consistency if they wish. This safeguards against rate-driven changes.
Sudden credit report changes or title issues uncovered shortly before closing could necessitate an updated Disclosure and documentation along with closing delays. It’s not common but can happen.
As the buyer, you always reserve the right to decline to close the transaction if uncomfortable with any Closing Disclosure changes that arise or costs significantly exceeding original estimates or agreements made.
To Avoid Surprises or Confusion on Closing Day:
Review all provided fees, loan costs and other Closing Disclosure details extensively upfront before initially signing.
Request explanations from the lender early on about any unclear charges or noticeably escalating costs above prior estimates.
Lock in your interest rate early, with a buffer window prior to closing sufficient to minimize chances of last-minute rate fluctuations impacting prepaid amounts.
Maintain constant open communication with your lender about any issues potentially requiring an update so you stay informed.
Being proactive when first reviewing the Closing Disclosure, asking questions, and locking your rate can help minimize the odds of any unwelcome changes arising down the road before closing. But buyers should still be aware that some minor fluctuations are possible in the final days leading up to settlement, and be prepared for that possibility.
Substantive changes are less likely but can certainly still happen even after initial signing. Any significant alterations do require the lender to issue an updated Closing Disclosure with an additional mandated 3-day waiting period before closing.
The three items are: 1) the APR becomes inaccurate (violates tolerances); 2) the addition of prepayment penalty; and, 3) a loan product change. These three items require redisclosure and a new waiting period of three business days prior to the loan closing.
Loan funding: Once you sign the closing disclosure, your lender reviews the document to ensure everything is in order. If there are no issues or discrepancies, they will proceed with funding the loan. This involves transferring the approved loan amount to the designated account or issuing a check.
You can correct errors on the closing disclosure before the closing, but the loan amount and interest rate can't change unless there's a change in circ*mstances.
It is most common that only minor changes occur, typically due to slight recalculations of tax prorations, prepaid interest, escrow account adjustments or minor modifications in the final loan amount after the last underwriting review.
If changes need to be made, you have 3 additional business days prior to closing to review the revised Closing Disclosure. Once they've been fixed, compare the Loan Estimate and Closing Disclosure again to ensure that they match up.
Your lender is bound by law to stick to your contract. After closing, your lender cannot go back on the arrangement they have made with you. Your loan can be denied anytime from the point of application to the point of closing.
Receiving your Closing Disclosure basically indicates you're almost there, but not quite done with the mortgage process. Your loan officer may check your credit again before the mortgage closes. Any drastic changes in your reports could result in a delay of your closing date or worse.
This gives you time to review the terms of the deal before you get to the closing table. Many things can change in the days leading up to closing. Most changes will not require your lender to give you three more business days to review the new terms before closing.
There are a few more steps and actions to take before final approval, like an appraisal and inspection. How long does it take from clear to close to actual closing? It typically takes three days between the time you receive your closing disclosure and the day you close.
It's very important these items match what you were expecting. If they don't, call your lender immediately and ask why they have changed. If it has increased, ask your lender why. A possible reason could be that closing costs have been rolled into your loan.
It is possible for your lender to find a last-minute red flag and back out of the contract. In other words, getting denied after the Closing Disclosure is issued is possible. This is why it is important to make sure there are no major changes to your credit or income during this period.
The lender is primarily responsible for its accuracy and timely delivery to the borrower, while the title agent assists in gathering specific information and may handle both the buyer and seller's side of the disclosure.
The vast majority of the time the Initial CD won't be completely accurate, since it may not reflect seller credit, seller tax pro-rations, your earnest money, any realtor fees or survey/home inspection fees, etc. These are the items that will be adjusted by the title company at least 2-3 days before your closing.
Under the TRID Rule, a creditor must provide a consumer with an initial Closing Disclosure at least three business days before consummation and, if there are any changes to that disclosure, a corrected Closing Disclosure.
You took out a new loan or missed a payment on another loan, and your credit score has changed. Your lender could not verify your overtime, bonus, or other income. The interest rate on your loan was not locked, and locking the rate caused the points or lender credits to change.
“Changed circ*mstance” is a term defined in Regulation Z to include three scenarios: (1) an extraordinary event beyond any party's control, such as a natural disaster; (2) when the lender relied on specific information to complete the disclosure and that information later becomes inaccurate or changes after the ...
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