home loan estimate closing disclosure

First Time Home Buyer

Home Loan Estimate Vs. Closing Disclosure

Understanding the costs involved with buying a home is key to making an informed decision. After all, money doesn’t grow on trees and you want to make sure that you’re being financially responsible. When it comes to understanding the costs involved with your mortgage, two important documents that you’ll want to pay attention to are your Home Loan Estimate document and your Closing Disclosure. Below, we’ve explained these two documents in detail, how they’re different, and why they’re important.

Home Loan Estimate Vs. Closing Disclosure: Key Differences

When applying for a mortgage, you will receive two important documents that outline your expected costs – your Home Loan Estimate document and your Closing Disclosure. Because these documents both discuss mortgage costs, it’s common for first-time homebuyers to get them confused. But they are two separate documents that serve different purposes in the mortgage process. 


What Is a Home Loan Estimate?

The Home Loan Estimate (HLE) is a form you receive after applying for a mortgage. This three-page document lists important details about your loan including:

  • Interest rate and payments
  • Closing costs
  • Taxes and insurance 

Your lender must provide the HLE within three business days of your application. Review it carefully to understand your loan and the fees involved. 


What Is a Closing Disclosure?

Your Closing Disclosure (CD) contains your final loan terms and closing costs. Lenders provide this five-page form three business days before closing on your home. This waiting period allows you to compare your CD with your HLE and all the expenses involved with your home loan. You should review your Closing Disclosure carefully and report any discrepancies so they can be corrected before closing.


Comparing Estimates and Final Costs

The figures on your Closing Disclosure will likely differ from the estimates provided on your initial Home Loan Estimate. This is because your Home Loan Estimate provides preliminary estimates of your loan costs and terms. It’s meant to help you compare options when applying for a mortgage. 

Your Closing Disclosure details the final, concrete numbers and terms of your actual loan offer. While the figures on your Closing Disclosure should be relatively similar to your Home Loan Estimate, it’s common for some of the numbers to change. There are a few reasons for this:

  • Interest rate fluctuations
  • New info on property taxes and home insurance
  • Title work discoveries
  • Changes in credit score
  • Variations in daily closing fees

Generally speaking, your total closing costs listed on your Closing Disclosure should not increase by more than 10% compared to your Home Loan Estimate. We recommend comparing the two forms side-by-side. Let your lender know about any major discrepancies to prevent issues during your closing.


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