The closing disclosure is a document that lenders are required, by law, to provide to borrowers outlining the terms, conditions, and expenses of the mortgage loan. Throughout the loan process you will receive several estimates starting with the initial loan estimate, possibly a revised loan estimate, then a preliminary closing disclosure and finally the closing disclosure.
The lender must provide the “closing disclosure” at least three business days prior to closing on the house. This is known as the Three Day Rule.
If you the borrower does not sign and return that document within that time period, the closing will be delayed. With that said, when you sign the document, you are only signing to acknowledge that you received it, not that you are committing to the terms and conditions.
The three-day requirement creates a window of time for you to review the closing document, ask any questions you might have, identify discrepancies, and raise any issues you might have with the lender.
However, at closing you will be presented with a final closing disclosure to acknowledge and sign. There are often fees, expenses, or other cost adjustments that didn’t make it onto the previous closing disclosure. For instance, the cost of a late appraisal or inspection would be added to this final closing disclosure.
This may seem like an unnecessarily drawn-out process. But it is intended to protect the borrower by making sure they have enough time to fully understand the loans terms. And conditions and that those terms and conditions cannot change without the borrower being informed.