How to Read a Texas Closing Disclosure Before You Sign

The Closing Disclosure arrives in your email three business days before closing. Federal law — specifically TRID, the TILA-RESPA Integrated Disclosure rule — requires your lender to deliver it within that window. Most buyers scroll to the cash-to-close number on page 1, exhale (or wince), and file the rest. That is a mistake. The CD is a five-page federal document that accounts for every dollar changing hands at your closing, and errors appear on it more often than buyers realize. Catching a mistake after you've signed is significantly harder than catching it before. This article walks you through every section, in order, so you can review your CD like someone who knows what they're looking at.

Page 1: The Summary You Actually Need to Read

Page 1 contains four blocks. The first is Loan Terms — confirm the loan amount, interest rate, whether your rate is fixed or adjustable, and whether the loan carries a prepayment penalty or balloon payment. These should be precisely what you agreed to. If anything differs from your Loan Estimate, stop and call your loan officer before proceeding.

The second block is Projected Payments, which shows your estimated monthly payment broken into principal and interest, mortgage insurance (if applicable), and estimated escrow for taxes and insurance. This is not your exact monthly payment — it is a calculated projection — but it should be close to what your lender quoted.

The third and fourth blocks are Costs at Closing and Cash to Close. Closing costs here are a rolled-up total; the detail lives on pages 2 and 3. Cash to close reflects your down payment, closing costs, and any credits combined. Compare these figures directly to your Loan Estimate. Material differences without explanation are a red flag.

Pages 2–3: The Fee Breakdown by Section

Pages 2 and 3 itemize every fee by alphabetically labeled section. Work through them line by line.

Section A: Origination Charges covers the lender's fees — origination fee, underwriting fee, and any discount points you paid to buy down your rate. Verify these match your Loan Estimate exactly; they are zero-tolerance items (explained below).

Section B: Services You Cannot Shop For includes the appraisal, credit report, flood zone determination, and any other services your lender required and selected. You had no choice of provider here.

Section C: Services You Can Shop For covers title search, settlement fees, and closing agent fees — services where you had the right to choose your provider. In Texas, this often means your title company's closing and settlement fees appear here.

Section E: Taxes and Government Recording Fees lists the county recording fee and any transfer taxes. Texas has no state-level real estate transfer tax, but recording fees vary by county and by the number of pages in your deed and deed of trust.

Section F: Prepaids includes prepaid mortgage interest (calculated from your closing date to the end of that month), the first year of homeowner's insurance if paid at closing, and prepaid mortgage insurance if applicable. These amounts shift based on the day of the month you close — closing earlier in the month means more days of prepaid interest.

Section G: Initial Escrow Payment at Closing shows the property tax and insurance reserves your lender collects upfront to seed your escrow account. This is separate from your prepaids and funds the cushion your servicer is required to maintain.

Section H: Other catches items like HOA transfer fees, a home warranty if negotiated into the contract, or any other miscellaneous charges.

Section J at the bottom of page 3 is the total of all closing costs. Add any credits and your down payment to reconcile the cash-to-close figure from page 1.

What Can Change Between Your Loan Estimate and Closing Disclosure? The CFPB's tolerance rules define exactly how much fees can move. Zero-tolerance items cannot increase at all — these include lender origination charges, transfer taxes, and title fees if your lender selected the provider. Ten-percent tolerance items can increase in aggregate by up to 10% — this includes title insurance you shopped for yourself and recording fees. Unlimited change applies to prepaids and initial escrow payments, which adjust with the day of closing and insurance premium changes. If you see a zero-tolerance item increase between your LE and CD, request a written explanation from your lender before you proceed. Lenders must either cure the overcharge or demonstrate a valid changed-circumstance justification.

Pages 4–5: Loan Terms and Signatures

Page 4 is the escrow account detail page. It shows your lender's projected annual disbursements for property taxes and homeowner's insurance, and the resulting monthly escrow payment. Review the property tax estimate carefully — if the previous owner held a homestead exemption and you are not yet eligible, your actual tax bill in year one may be higher than projected.

Page 5 is the contact sheet listing your lender, mortgage broker (if applicable), real estate agents, and settlement agent, including their license numbers and contact information. It also contains the Loan Calculations table, which is one of the most useful comparisons a buyer can make: total of all payments over the loan term, total interest paid, APR, and Total Interest Percentage. The APR incorporates fees into the rate and gives you a true cost of the loan. If you received multiple loan offers, compare APRs — not just interest rates — to understand which loan actually costs less.

Common Errors to Look For

Errors on closing disclosures are not rare. Check for:

  • Misspelled names — your name must match your ID and deed exactly, or title issues can follow
  • Wrong loan amount or interest rate compared to your final locked terms
  • Fees not disclosed on the original Loan Estimate without a valid changed-circumstance letter
  • Missing seller credits that were negotiated in the purchase contract
  • Property tax estimates based on the prior owner's exemption rather than the unexempted value
  • Incorrect recording fees that do not match the county's published schedule
  • Wrong closing date producing a prepaid interest calculation that doesn't align with your actual settlement date
Your Three Business Days Matter Federal law gives you a minimum of three business days to review the CD before closing. Use that time deliberately. If you find discrepancies, contact your loan officer the day you receive the document — not the morning of closing. Be aware that certain changes to a CD will reset the three-day clock entirely: a change in APR beyond tolerance, a switch in loan product, or the addition of a prepayment penalty all require a new disclosure and a new waiting period. Minor numerical corrections can often be resolved without delaying your closing date, but only if you raise them early.

How Your Texas Title Company Fits In

In Texas, the title company typically serves as both the title underwriter and the closing agent. They prepare a Texas-specific settlement statement that runs parallel to the CD and coordinates the final wire transfer of funds. Your title company will guide you through every document at the closing table — but the CD comes from your lender, not the title company. When you receive your CD, ask your title company for their preliminary settlement statement as well, and verify that the two documents reconcile on every line that appears in both.

The closing table is not the time to read your Closing Disclosure for the first time. Review it the day it arrives. Cross-reference every fee against your Loan Estimate, flag anything that doesn't match, and bring your questions to your lender in writing before closing day. Your agent can help you understand the contract-side figures — seller credits, prorations, and earnest money — but the loan terms are between you and your lender. Knowing what each page contains means you sign because you understand what you're signing, not simply because everyone in the room is waiting for you to finish.