Loan Estimate vs. Closing Disclosure: Understanding Your Key Mortgage Documents

Two federal disclosure documents define the mortgage process from application to closing: the Loan Estimate issued at the beginning and the Closing Disclosure issued at the end. Understanding both — and the connection between them — protects you throughout the transaction.

The Loan Estimate

Issued within three business days of a completed application, the Loan Estimate provides an estimate of your loan terms, projected monthly payment, and closing costs in a standardized three-page format.

It is designed for comparison shopping — the format is identical across all lenders so you can compare side by side. It is not binding — it is an estimate. But certain items cannot increase at closing.

The Closing Disclosure

Issued at least three business days before closing, the Closing Disclosure is the final version of the Loan Estimate numbers. At this point, fees are binding within tolerance limits. It shows the exact figures you will sign at the closing table.

You must have three business days after receiving the CD before you can close — giving you time to review and ask questions.

What Can and Cannot Change

Certain closing cost categories have zero tolerance for increases: lender origination charges, required lender services, and transfer taxes. Other categories allow limited increases of 10%. Still others — third-party services you shopped for — have no tolerance limit.

If the Closing Disclosure shows a significant increase in any lender fee from the Loan Estimate, ask your loan officer for an explanation. Zero-tolerance violations can result in lender credits to offset the overage.

How to Compare the Two Documents

Line up both documents side by side. Compare Section A (origination charges), the interest rate, APR, loan amount, and projected monthly payment. Note any changes and get clear explanations before signing.

At East Coast Mortgage, we review both documents with every borrower and address every question before the closing table. Book a call to get started.