Unlocking the Mysteries of the Closing Disclosure (CD - formerly HUD-1)
The Closing Disclosure (CD), previously known as the HUD-1, is a crucial three-page, government-mandated form that delineates the costs associated with a real estate transaction. Borrowers should ideally receive a copy of the CD at least one day before the closing date. The figures provided on the CD represent the actual charges tied to the loan, making it imperative for all stakeholders to scrutinize the document for any inaccuracies.
Since 2010, settlement agents are required to incorporate the Loan Estimate (LE), formerly known as the Good-Faith Estimate, figures into the CD. This safeguard allows borrowers to juxtapose initial loan estimates with the final loan costs. Side-by-side comparison can reveal any discrepancies or significant variations, enabling corrections to be made before the actual closing, ensuring transparent and accurate financial dealings.
It’s essential for homeowners, real estate professionals, and lenders to comprehend how to read and interpret the CD to prevent misunderstandings or financial discrepancies in what is often one of the most significant financial transactions in one’s life.
Related Terms: Loan Estimate, Good-Faith Estimate, Settlement Agent, Real Estate Transaction, Mortgage.
