Home Loan Estimate Vs. Closing Disclosure (2024)

FAQs

Is the loan estimate the same as the closing disclosure? ›

The Loan Estimate and Closing Disclosure are two forms that you'll receive during the home-buying process. The Loan Estimate comes at the beginning, after you apply, while the Closing Disclosure comes at the end before you sign the final paperwork for your mortgage.

No, a closing disclosure is not the same as final approval. It is a document that outlines the terms of your mortgage loan, including the interest rate, fees, and other charges. You will still need to go through the underwriting process and receive final approval before closing on your loan.

Technically, a loan estimate is only binding on the date it's issued. The lender has to give you the loan, with exactly the terms listed in the loan estimate, if on that day you take steps to accept the loan and lock your rate in.

Despite receiving the Closing Disclosure, loan approval is not guaranteed, and unforeseen circ*mstances can lead to denial, such as changes in financial status or property issues discovered during underwriting.

As your closing date may be changed, the amount of interest you will need to pay for your first month of homeownership will depend on how many days are left in the month. Homeowner's insurance: Your homeowner's insurance amount can also change between the Loan Estimate and Closing Disclosure.

Clear to close means you're ready for the closing process, while closing refers to the act of closing on your mortgage loan. After you've been cleared to close you'll need to sign your closing disclosure, do a final walkthrough and attend your closing.

Your lender is required by law to give you the standardized Closing Disclosure at least 3 business days before closing. This is what is known as the Closing Disclosure 3-day rule. This requirement is thanks to the TILA-RESPA Integrated Disclosures guidelines, which went into effect on October 3, 2015.

Closing Day

The first thing that will happen after your final Closing Disclosure is the closing! This is when you'll sign the remaining paperwork and get the keys to your new home. On closing day, you'll sit down with your lawyer and a representative of the title company.

When you receive a Loan Estimate, the lender has not yet approved or denied your loan application. The Loan Estimate shows you what loan terms the lender expects to offer if you decide to move forward. If you decide to move forward, the lender will ask you for additional financial information.

An estimate is a non-legally binding document. It is an approximation of costs for a project, drawn up by a business to send to a client. It is not a promise.

How accurate are loan estimates? ›

You want accurate figures. At Homebuyer and plenty of other lenders, these costs get estimated as close to 100 percent accurate as possible. Remember that numbers are never exact upfront. Don't worry about any estimated fees that your lender doesn't dictate.

No, a closing disclosure does not always mean your loan is approved. You may find incorrect information or something you want to change.

What is the "right of rescission?" Yes. For certain types of mortgages, after you sign your mortgage closing documents, you may be able to change your mind. You have the right to cancel, also known as the right of rescission, for most non-purchase money mortgages.

A consumer must receive a final revised Loan Estimate not later than 4 [specific] business days prior to consummation. A creditor cannot provide a revised Loan Estimate on or after the date the Closing Disclosure is delivered or mailed.

The consumer must receive the corrected Loan Estimate no later than 4 (four) business days before consummation. Note: There must be at least 1 (one) business day between the disclosure of the most recent Loan Estimate and the issuance of the Closing Disclosure (§1026.19 (e)(4)(ii)-1).

You'll want to compare the Closing Disclosure side by side with your Loan Estimate. Most of the numbers and terms should be similar, but they may differ because of the time that's passed between the Loan Estimate and the final costs reported on the Closing Disclosure.

The form provides you with important information, including the estimated interest rate, monthly payment, and total closing costs for the loan. The Loan Estimate also gives you information about the estimated costs of taxes and insurance, and how the interest rate and payments may change in the future.

Loan estimates are issued after you fill out a lender's application — within three days or less. The form will detail the terms of the loan they're offering you. You can then use this to compare different lenders on terms, interest rates, closing costs, and other details.