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closing disclosure

A Closing Disclosure is a five-page form that provides final details about the mortgage loan you have selected. It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage (closing costs).

The lender is required to give you the Closing Disclosure at least three business days before you close on the mortgage loan. This three-day window allows you time to compare your final terms and costs to those provided in the loan estimate that you previously received from the lender. The three days also gives you time to ask your lender any questions before you go to the closing table.

You won’t receive a Closing Disclosure if you’re applying for a reverse mortgage. For those loans, you will receive two forms—a HUD-1 Settlement Statement and a final Truth in Lending Disclosure—instead of the Closing Disclosure.

If you are applying for a home equity line of credit (HELOC); a manufactured housing loan that is not secured by real estate; or a loan through certain types of homebuyer assistance programs, you will not receive a HUD-1 or a Closing Disclosure—but you should receive a Truth-in-Lending disclosure.

In Texas, as in all states, the Closing Disclosure form is a critical document for most mortgage transactions. It is mandated by federal law under the Real Estate Settlement Procedures Act (RESPA) as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act and implemented by the Consumer Financial Protection Bureau's (CFPB) TILA-RESPA Integrated Disclosure (TRID) rule. The lender is required to provide the Closing Disclosure to the borrower at least three business days before the closing of the mortgage loan. This form details the loan terms, monthly payments, and all closing costs. The purpose of this period is to allow the borrower to review the final terms and ensure they are consistent with the initial loan estimate, and to clarify any questions with the lender. Exceptions to receiving a Closing Disclosure include reverse mortgages, home equity lines of credit (HELOCs), manufactured housing loans not secured by real estate, and certain homebuyer assistance program loans. For reverse mortgages, borrowers will receive a HUD-1 Settlement Statement and a final Truth in Lending Disclosure instead. For the other exceptions, borrowers should receive a Truth-in-Lending disclosure.

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