Initial Closing Disclosure (CD) – What You Need to Know
The Closing Disclosure (a.k.a. “the CD”) is the mortgage document that outlines all the details of the financing. The lender creates the initial CD after the initial underwriting approval. The first page of the Closing Disclosure contains the loan’s terms and provides a breakdown of the monthly mortgage payment. The subsequent pages itemize the closing costs.
There will be two Closing Disclosures issued during the process: the “Initial CD” and the “Final CD”. The Initial CD is the most time-sensitive document throughout the mortgage loan process because it requires e-signatures a minimum of three days before closing.
Mortgage Loan Process Outline
- Loan Packaging & Lender’s Disclosures (1-2 days)
- Loan Setup (2-3 days)
- Processing / Credit Approval (2-3 days)
- Loan Underwriting (2-10 days)
- Sign the Initial Closing Disclosure (CD) (Immediate) <== YOU ARE HERE
- Documents to Title / Final CD Issued (1-2 days)
- Closing & Funding
Initial CD: Super Important
At some point before your mortgage closing, our processor will send you the initial Closing Disclosure (CD). All parties on the loan (and in some cases even spouses that aren’t on the loan) must e-sign the Initial CD to close on time.
Federal law mandates the Initial Closing Disclosure be signed three business days before closing. A delay in signing the Initial CD will result in a delayed closing.
Example 1: A loan closing on a Thursday must have the Initial Closing Disclosure e-signed before midnight on Monday to satisfy the three-day waiting period. (Monday, Tuesday, and Wednesday)
Example 2: It’s important to note that Sundays and federal holidays do not count as “waiting days”. Therefore, a loan closing on a Tuesday requires the Initial CD be e-signed by Friday to satisfy the three-day waiting period. (Friday, Saturday, and Monday)
Initial CD is an Estimate… not exact figures
Please sign the Initial CD immediately upon receipt and don’t panic if it’s not perfect. The vast majority of the time the Initial CD won’t be completely accurate, since it may not reflect seller credit, seller tax pro-rations, your earnest money, any realtor fees or survey/home inspection fees, etc. These are the items that will be adjusted by the title company at least 2-3 days before your closing.
Think of the Initial Closing Disclosure like a permission slip. By e-signing it, you are starting the mandatory clock and allowing the lender to collaborate with the title company to prepare the accurate Final CD.
Final CD
The Final Closing Disclosure (CD) will provide the final and exact costs. The title company sends us the Final CD at least a few days before closing. We then email you the Final CD and let you know how much money you are going to need to bring to closing or how much money you are going to receive at closing (on a refinance).