Loan Disclosures Explained

You have to sign them with every purchase or refinance, but what are loan disclosures? Basically, they are the documents we as lenders are required by law to disclose to you, many of which you sign to acknowledge. Here are a few important facts about your loan disclosures that I hope will make signing them less overwhelming. 🙂

Two Sets of Loan Disclosures, the LE, and the CD

  1. Initial loan disclosures are those we must disclose to start your loan. Generally these disclosures inform you of the regulations we have to abide by in order to lend to you, such as the equal credit opportunity act. There are also disclosures to inform you of your rights, such as the right to receive the appraisal. What I consider the most important initial disclosure though, is the loan estimate.
  2. The Loan Estimate, or LE, contains all the important terms of your loan, including loan program, interest rate, term of the loan, closing costs and cash to close. I review this carefully with my clients to ensure they understand the important facts of their loan.
  3. Closing disclosures include all the documents we must disclose to you in order to close your loan. They include disclosures about your loan servicing, your final settlement statement numbers from escrow, and most importantly, your note (which obligates you to the loan) and deed of trust (which is records your home ownership or mortgage change with the county). You will want to keep your copy of these two documents for your records.
  4. The Closing Disclosure, or CD, is an updated version of the LE with closing terms that you receive before signing. I advise borrowers to review this disclosure carefully to ensure all terms are accurate, and as expected.

Watch below for more, and don’t hesitate to reach out with questions!