The Closing Disclosure, commonly known by it’s acronym “CD”, is the lender’s federally-mandated final guess at your closing costs. It’s essentially the borrower’s final Loan Estimate- periodic estimates of the transaction’s costs, credits, and summaries. The CD is important primarily because of its mandatory waiting period. Since the 08’ financial crisis, federal law now requires 3 business days to elapse between the acknowledgement of the CD and the signing of official loan documents.
Key Points:
The CD is not final and it does not mean all line items are accurate. It is the lender’s attempt at an estimate w/ the information they have. There can be several iterations, and the lender is required to match (aka “balance”) escrow’s master fees worksheet once closing procedures begin.
The CD is only released after the majority of the loan’s variable costs (think insurance, seller negotiations, title fees, etc) have been identified.
The mandatory 3 business day period includes Saturdays but excludes Sundays and federal holidays.
Despite being the “final loan estimate” the CD can—and often does—get revised after acknowledgement. Further, subsequent issuance of CDs does not reset the three day timer.
Use this tool for an interactive, in-depth guide to what you’re looking at.
Your Task: CD needs to be "acknowledged" to start a federally-mandated, 3-day waiting period. You cannot sign loan docs--and thus, cannot close--until this 3 day timer is up.
Despite of the use of the word “final”, this is NOT a an official invoice of closing costs. It IS, however, something you want to take a close look at. If you see anything funky, please let me know so it can be fixed or explained.
Contrary to my usual advice, it's always smarter to acknowledge this first, THEN address concerns if applicable. Clerical errors are easily fixed, but that 3-day timer can, has, and will blow stuff up.
After acknowledgement, the bank contacts our escrow/title office and begins "balancing" their CD w/ escrow's Closing Stmt. The Closing Statement is the master sheet. All paths lead to the one true invoice.
Use this for an interactive, in-depth guide on what you're reading.
"Acknowledgement" can look different depending on the bank we're using, but it's almost always an email link that you open, scroll through, and press an 'acknowledge'/'submit' button at the bottom. You're often notified via confirmation email, but not always. If you're unsure about any of this, contact me!
For those interested in how the timer works: If a singular borrower acknowledges the CD before 8:59p PST, that day is Day 0. Excluding Sundays and federally-recognized holidays, you can sign loan docs at 9a on Day 3.
For example, if you acknowledged your CD at 8:59p on the Thursday before Labor Day, the soonest you could sign loan docs would be the following Tuesday at 9a.