This blog is one of the most viewed pages on our website, so I thought I’d update it and send it out again because there is clearly a lot of interest.
People always want to know the exact day we can close when we prepare a Closing Disclosure (CD) and send loan documents to title.
What Is the Closing Disclosure 3-Day Rule?
The closing disclosure 3-day rule requires you to receive your Closing Disclosure (CD) at least three business days before you sign your loan documents at closing. This waiting period gives you time to review the final loan terms and costs, and the clock starts when you receive and acknowledge the CD, not when your lender sends it.
What Is A Closing Disclosure Form?
As a reminder, a Closing Disclosure is a form that sets out all of the updated fees and terms associated with a borrower’s loan.
Lenders can prepare CDs at any time in the process, but since the fees they disclose are so heavily regulated, most lenders have a few checks in place before a CD can be sent:
- Loan is at least conditionally approved
- Appraisal is in and any value issues are addressed
- Insurance is in, or home is confirmed to be insurable
- Lender has collected invoices for any loan-related third-party fees, such as credit report or HOA fees
A Closing Disclosure is typically sent electronically for the borrower’s e-signature.
Borrowers cannot sign loan documents until three business days have passed from the date of the CD acknowledgment (or e-signing).
If any loan-related fees are added after the CD is sent, a new CD may need to be issued, potentially starting a new waiting period.
This is why most lenders do not issue CDs until they know what all of the fees or closing costs will be with relative certainty.
Some lenders issue CDs early in the process and they protect themselves (or the need to re-disclose) by simply overstating some fees.
We avoid this practice because it fosters confusion and it can be misleading.
Closing Disclosure Timeline and the 3-Day Rule
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).
The table below sets out the acknowledgment and earliest possible signing days.
Closing Disclosure Calendar
| ACKNOWLEDGED | CAN SIGN |
|---|---|
| Monday | Thursday |
| Tuesday | Friday |
| Wednesday | Saturday |
| Thursday | Monday |
| Friday | Tuesday |
Lastly, federal holidays and Sundays do not count as business days.
We typically fund loans 1-2 business days after a borrower signs their loan documents.
FAQs
How does the closing disclosure 3-day rule work?
You must receive your Closing Disclosure at least three business days before closing. For this rule, business days include Saturdays but exclude Sundays and federal holidays, so a CD received on Monday supports a Thursday closing, while one received Thursday supports a Monday closing. Only three changes restart the clock: the APR becoming inaccurate, a change in the loan product, or a prepayment penalty being added.
When does the 3-day clock start?
The clock starts when you receive and acknowledge the Closing Disclosure, not when the lender sends it. If you e-sign, receipt is the date you acknowledge it; if it is mailed, you are generally considered to have received it three business days after mailing unless earlier receipt can be shown.
