What Is a CD in Real Estate? (Closing Disclosure)
Buying a home involves a flurry of paperwork, but perhaps the most important document is the closing disclosure, also known as a CD in real estate. This finish-line form is key to understanding the costs and commitments associated with your purchase.
This guide will break down what a CD includes, why it’s so important, and the most common mistakes to watch for so your closing doesn’t get delayed.
What is a CD in real estate?
A closing disclosure, or CD, is a five-page form that provides final details about the mortgage loan you have selected. It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage.
“The closing disclosure also explains to all the parties involved what exactly each one is being charged,” explains Deborah Lucci, a top-rated Massachusetts real estate agent with 26 years of experience. “For example, the CD will show how much tax is allotted to the seller and how much is allotted to the buyer, based on when the property sale is closed and when the taxes were last paid.”
The CD is given to homebuyers at least three business days before closing, allowing time to review and ensure everything is correct. This document is not just a formality; it’s a critical piece of the homebuying puzzle, ensuring there are no surprises on closing day.
Source: Consumer Financial Protection Bureau
Sample closing disclosure (CD)
A typical CD will contain several key sections:
Loan information: Details about the type of loan, interest rate, and term.
Loan terms: This includes your loan amount, interest rate, and whether these can change after closing.
Projected payments: Breakdown of your monthly payment, including principal, interest, mortgage insurance, and estimated escrow.
Costs at closing: Summary of transaction costs, including loan fees, property taxes, and homeowner’s insurance.
Take a closer look: The Consumer Financial Protection Bureau (CFPB) has created a sample CD interactive checklist that guides you through each section of the 5-page closing disclosure form.
