Your lender is required to send you a Closing Disclosure that you must receive at least three business days before your closing. It's important that you carefully review the Closing Disclosure to make sure that the terms of your loan are what you are expecting.
The California Purchase Contract is chock-full of deadlines: three days to place a deposit into escrow; 17 days to perform investigations; scheduling utilities, organizing closing, and many other important details.
For traditional mortgages, the most noticeable is the three business-day waiting period between receiving your closing disclosure and the consummation date (often known as your closing day). This three business-day rule was introduced in October of 2015, and it applies to both original mortgages and refinancing.
A consumer may modify or waive the right to the three-day waiting period only after receiving the disclosures required by § 1026.32 and only if the circumstances meet the criteria for establishing a bona fide personal financial emergency under § 1026.23(e).
It is possible for your lender to find a last-minute red flag and back out of the contract. In other words, getting denied after the Closing Disclosure is issued is possible. This is why it is important to make sure there are no major changes to your credit or income during this period.
Changes that require creditors to provide a new Closing Disclosure and an additional three-business-day waiting period after receipt include: changes to the APR above 1/8 of a percent for most loans (and 1/4 of a percent for loans with irregular payments or periods) changes the loan product.
A Closing Disclosure is not technically the same as being declared clear to close, but the disclosure typically comes after you have been cleared. After reviewing your Closing Disclosure, you can look forward to a final walkthrough of the home and closing day itself.
Timing Requirements – The “3/7/3 Rule”
The initial Truth in Lending Statement must be delivered to the consumer within 3 business days of the receipt of the loan application by the lender. The TILA statement is presumed to be delivered to the consumer 3 business days after it is mailed.
Once you and your lender sign the Closing Disclosure, no changes can be made to the mortgage terms. Is the Closing Disclosure the last step in the mortgage process? No, but you're very close to closing on your home now.
This clause allows a seller to continue marketing and accepting offers on their property even after they have accepted an initial offer, with the condition that the original buyer has a specified amount of time, typically 72 hours, to remove or waive any contingencies and proceed with the purchase.
Under another federal law, the "three-day cancellation rule," you have until midnight of the third business day after a contract was signed to cancel a home improvement loan, a second mortgage, or another loan where you pledge your home as security (except for a first mortgage).
How long after you buy a house can you change your mind? Once you sign the closing documents, you do not have the right to back out of your mortgage or home purchase. Once the title is transferred to your name, you become the owner.
What happens once I sign the Closing Disclosure? Once you sign the Closing Disclosure, your mortgage paperwork will be prepared and all involved parties should prepare for the loan to close in 3 business days at the earliest.
The TILA-RESPA rule provides consumer protections and limits the amount of any increase in the borrower's cash-to-close amount. Even the slightest change obligates the lender to issue a revised closing disclosure, but certain changes do not trigger a new 3-day waiting period after the new disclosure.
Loan Estimate Form: Replaces the initial Truth-in-Lending disclosure and the Good Faith Estimate. It must be provided to borrowers within three business days of submitting a mortgage application. This form summarizes key loan terms, estimated loan and closing costs, and other critical information.
A consumer may modify or waive the right to the three-day waiting period only after receiving the disclosures required by § 1026.32 and only if the circumstances meet the criteria for establishing a bona fide personal financial emergency under § 1026.23(e).
WAITING PERIODS
If the Closing Disclosure is acknowledged on a Thursday, for example, the borrower can sign loan docs on the following Monday; Friday would be Day #1; Saturday would be Day #2; and Monday would be Day #3 (borrower can sign on Day #3).
A good way to remember the documentation you'll need is to remember the 2-2-2 rule: 2 years of W-2s. 2 years of tax returns (federal and state) Your two most recent pay stubs.
No, a closing disclosure does not always mean your loan is approved. You may find incorrect information or something you want to change. Your lender also has the opportunity to back out if they find something new that makes them change their mind.
Things like changes to the interest rate, changes to the loan amount, and APR changes over an eighth of a percent, can trigger another waiting period.
Think of the Initial CD as a “permission slip.” It's not the final word on your loan's numbers, but by signing it, you start the clock for the federally mandated three-day waiting period before closing. Without it, your loan process can't move forward.
The three-day period is measured by days, not hours. Thus, disclosures must be delivered three days before closing, and not 72 hours prior to closing.
Lenders are required to provide your Closing Disclosure three business days before your scheduled closing. Use these days wisely—now is the time to resolve problems.
The lender cannot alter the following costs cannot change unless you've had a “change in circumstances” since receiving your Loan Estimate: Fees paid to the lender for a mandatory service. Fees for required services that the mortgage lender didn't allow you to shop for. Transfer taxes.