By Jacqueline O'Shaughnessy, Loan Officer / Private Capital, NMLS #382900 — South Wind Financial, Inc, NMLS #9462 — Las Vegas, NV

Understanding the Loan Estimate, Closing Disclosure, and Mortgage Closing Timeline

If you've ever heard your loan officer say, “We have to wait three days,” you may have wondered why. Mortgage lending has specific disclosure timelines designed to give borrowers time to review the terms and costs of their loan before closing.

You'll sometimes hear these requirements referred to as the 3/7/3 rule. The easiest way to understand it is to look at what happens at each stage of your mortgage.

The First 3 Days of the 3/7/3 rule: Your Loan Estimate

Once you've provided the information that constitutes a mortgage application, your lender generally has three business days to deliver or mail your Loan Estimate (LE).

The Loan Estimate gives you an early look at important information including your estimated interest rate, monthly payment, closing costs, taxes and insurance, and other features of the loan.

An application is triggered once the lender receives six pieces of information:

• Your name

• Your income

• Your Social Security number to obtain a credit report

• The property address

• An estimated property value

• The loan amount you're requesting

You don't have to provide every bank statement, pay stub, or tax return before you're entitled to receive a Loan Estimate.

The 7-Day Rule of the 3/7/3 rule: How Soon Can I Close?

Federal mortgage rules generally require the initial Loan Estimate to be delivered or placed in the mail at least seven business days before consummation.

In plain English: you generally can't apply for a covered mortgage today and close tomorrow.

This waiting period gives you time to review the proposed financing before becoming legally obligated on the loan.

The Final 3 Days of the 3/7/3 rule: Your Closing Disclosure

Before closing, you'll receive a Closing Disclosure (CD) showing the final details of your mortgage, including your interest rate, monthly payment, loan costs, closing costs, and the amount you'll need to bring to closing.

You must receive the Closing Disclosure at least three business days before consummation.

This is one of the reasons I tell borrowers not to wait until closing day to look at their numbers. Compare the CD with your Loan Estimate and ask questions while there is still time to address them.

My Closing Is Friday. When Do I Need My Closing Disclosure?

This is where borrowers—and sometimes people in the industry—get confused.

The rule is based on when the borrower is considered to have received the Closing Disclosure, not simply when someone starts preparing it.

The method of delivery also matters, so don't try to calculate your closing date yourself based on when someone says the CD was “sent.” Ask your loan officer when your waiting period begins and what your earliest permitted closing date is.

Does Saturday Count as a Business Day?

Sometimes.

One reason these timelines are confusing is that “business day” does not have exactly the same meaning for every TRID requirement.

For some disclosure requirements, a business day generally means a day the creditor's offices are open to the public for substantially all business functions. For certain waiting periods, including the seven-business-day and Closing Disclosure waiting periods, the definition generally includes all calendar days except Sundays and specified federal legal public holidays.

That means Saturday may count even though your lender, title company, or real estate agent isn't working that day.

What If Something Changes on My Closing Disclosure?

This is probably the biggest misconception about the three-day rule:

Not every change starts the three-day clock over.

Many corrections can be made without delaying closing. Under the TRID rules, a new three-business-day waiting period is generally required when:

• The APR becomes inaccurate beyond the applicable regulatory tolerance;

• The loan product changes, such as a change that makes the disclosed loan-product information inaccurate; or

• A prepayment penalty is added.

For most other changes, the lender still needs to provide an accurate corrected Closing Disclosure, but another three-business-day waiting period is not automatically required.

So if a small fee changes, don't immediately assume your closing has been delayed three more days.

Can the Three-Day Waiting Period Ever Be Waived?

There is a very limited exception for a bona fide personal financial emergency.

This isn't intended as a way to waive the waiting period simply because everyone wants to close sooner. The borrower must meet specific requirements, including providing a written statement describing the emergency.

In an ordinary purchase or refinance, you should plan on the required waiting period.

Why Do These Rules Matter?

Because closing dates matter.

Movers may be scheduled. A seller may be purchasing another property. A rate lock may be approaching expiration. An investor may have another transaction depending on this one.

Understanding the disclosure timeline helps prevent an avoidable surprise at the end of the transaction.

My advice is simple: don't wait until the last minute to review your disclosures. Open your Loan Estimate and Closing Disclosure when you receive them. Look at the interest rate, loan amount, payment, cash to close, and closing costs. If something doesn't look right, call your loan officer immediately.

A good closing should not involve discovering your loan terms for the first time at the signing table.

Helpful Resources

The Consumer Financial Protection Bureau provides interactive examples that explain exactly where to find the important information on your Loan Estimate and Closing Disclosure.

📖 Read the Complete Guide

CFPB Loan Estimate:Review a Loan Estimate

CFPB Closing Disclosure:Review a Closing Disclosure

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All my best

Jacqueline O'Shaughnessy

Loan Officer/Private Capital

www.privatemoneyloans.vegas

South Wind Financial, Inc

6655 W. Sahara Ave., suite D114

Las Vegas, NV 89148

702-429-3994 cell

702-543-7535 eFax

Company NMLS #9462

Agent # 382900

Agent license #6603

CA-DFP1382900

AZ 1032777

FL L0101736