What Is a Loan Estimate (LE) or a Closing Disclosure (CD)?

Your lender has to give you very specific information at the start and end of your home purchase, kind of like bookending your loan process. The loan estimate and closing disclosure should look very much alike. Learn about your lenders responsibilities, what you need to do, and why the LE and CD should match as closely as possible. 

Your Loan Estimate 

When you apply for a home loan, your lender will ask for some basic information, including your name, social security number, income, address and value of the home you want to buy, and amount you are seeking. 

Then they will prepare a document known as a loan estimate. The LE is a three-page form that lists the loan amount, anticipated interest rate, and estimated monthly mortgage payment, closing costs, taxes and other fees. Your lender must give this to you within three days after receiving your application.   

If you’ve locked yourrate, the LE will reflect that. If not, the LE will note that the interest rate may change. A locked rate means that the lender must honor the terms of the loan (within certain tolerances on the closing costs.)

If there is a valid circumstance, like you’ve had a lock extension, the home came back with a lower appraised value, or your interest rate or loan details change, your lender may send you a revised LE. 

Your Closing Disclosure

Three days before you are scheduled to close, your lender will send you another document. This one is five pages long, and is called the closing disclosure (CD.) The CD lays out the final details and costs for your home loan.  

The CD is supposed to match your LE within the government allowed tolerances. Again, it will show the loan amount, interest rate, monthly payment, closing costs, taxes, insurance and other costs as well as summaries of all transactions so far.

It’s best to sit down with both documents and compare them line by line. If there is a large discrepancy, you need to contact your LO right away.