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Know Before You Owe

For most Americans, buying a home means taking out a mortgage loan. The Dodd-Frank Act requires us to combine the Truth in Lending Act and Real Estate Settlement Procedures Act disclosures. You receive these disclosures shortly after you apply for a mortgage and shortly before you close on the mortgage. We decided to involve the people who will actually use the new forms—consumers, lenders, mortgage brokers, settlement agents—in helping to combine and improve them.

These are the results.

On this page


The new disclosures: Compare our new disclosures to the existing ones.

What makes them better: See a sample Loan Estimate with examples of how we’re improving people’s ability to understand their mortgages.

How we got here: Review a timeline of the project, from the Dodd-Frank Act to today.

More resources: What this rule means for consumers, links to information about the rule that creates the disclosures, reports on what we heard in testing, and more.


The new disclosures

Our new disclosures are easier to understand and use than the existing disclosures. In addition, the Loan Estimate you get after you apply for a mortgage and the Closing Disclosure you get before you close are designed to work with each other. Take a look at them side by side to see how they’re different.

Compare the disclosures

The disclosure forms compared above are for common mortgage loan transactions. Here are new disclosures forms for other uses:

»Loan Estimate for a refinance with no seller
»Closing Disclosure for a refinance with no seller
»Closing Disclosure provided to the seller separately
»A blank Loan Estimate
»A blank Closing Disclosure


What makes the new disclosures better

To be sure the Loan Estimate and the Closing Disclosure are easier to use and understand than the existing forms, we tested them in a quantitative validation study. Participants provided more correct answers about a sample mortgage using the new forms than they did using the current forms.

We’ve annotated the front page of the new Loan Estimate below with a few examples of some of the differences. On the form itself, click on any of the sections from this list to learn more about how it helps consumers: what it means and/or what we learned about it from testing.

Loan Amount | Interest Rate | Estimated Total Monthly Payment | Estimated Closing Costs | Website URL

Page 1 of the new Loan Estimate. For examples of what we learned about how our new disclosures work better for consumers than existing disclosures, see our quantitative testing report.
Loan Amount. Using existing forms, 61 percent of survey respondents could say what the loan amount was. Using the new forms, that number jumped to 99 percent. When the amount changed from the Loan Estimate to the Closing Disclosure, we saw greater than 30 percent improvements in knowing not only that the amount had changed but also why it had changed. Interest Rate. Most respondents got the year one interest rate right with the current disclosures, though slightly more got it right with our new ones (92.1 vs. 96.7 percent). Roughly the same number (about 93 percent in both cases) could say whether the interest rate could change. The new forms excelled on timing: 90 percent could say when the rate could change, up from 81 percent. Finally, roughly the same number of people using the new forms could tell that the principle and interest change could change over time (from 90 percent to 89 percent). Estimated Closing Costs. When we asked for "estimated settlement charges," the new disclosure performed worse. The new forms use different language (the more common "closing costs," not "settlement charges"). But when it comes to comparing, our disclosures are easier to use. When we asked whether settlement charges had changed from the Loan Estimate to a corresponding Closing Disclosure, far more people accurately noted there were changes with the new forms than with the current forms. Estimated Total Monthly Payment. 68 percent of respondents correctly noted the first month’s payment using the new disclosures. Well under half the respondents could do so using the existing ones. Website URL. When the new disclosures are in use, this page will help you to understand the new forms and to be savvy mortgage shoppers. Sign up to hear from us as we create these new resources.

Loan Amount

Using existing forms, 61 percent of survey respondents could say what the loan amount was. Using the new forms, that number jumped to 99 percent. When the amount changed from the Loan Estimate to the Closing Disclosure, we saw greater than 30 percent improvements in knowing not only that the amount had changed but also why it had changed.

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Interest Rate

Most respondents got the year one interest rate right with the current disclosures, though slightly more got it right with our new ones (92.1 vs. 96.7 percent). Roughly the same number (about 93 percent in both cases) could say whether the interest rate could change. The new forms excelled on timing: 90 percent could say when the rate could change, up from 81 percent. Finally, roughly the same number of people using the new forms could tell that the principle and interest change could change over time (from 90 percent to 89 percent).

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Estimated Closing Costs

When we asked for “estimated settlement charges,” the new disclosure performed worse. The new forms use different language (the more common “closing costs,” not “settlement charges”). But when it comes to comparing, our disclosures are easier to use. When we asked whether settlement charges had changed from the Loan Estimate to a corresponding Closing Disclosure, far more people accurately noted there were changes with the new forms than with the current forms.

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Estimated Total Monthly Payment

68 percent of respondents correctly noted the first month’s payment using the new disclosures. Well under half the respondents could do so using the existing ones.

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Website URL

When the new disclosures are in use, this page will help you to understand the new forms and to be savvy mortgage shoppers. Hear from us as we create these new resources.

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Download PDFs of the new disclosures:
Loan Estimate
Closing Disclosure

Find more about the specific changes to Regulations X and Z on our TILA-RESPA rule page. For more about the testing results and methods, see the bottom of this page.


How we did it

The Dodd-Frank Act required the CFPB to integrate existing mortgage disclosure forms to improve compliance and help people understand their loans. We started the Know Before You Owe project for mortgage disclosures to get a wide array of feedback as we designed the prototypes for the new forms. Here’s a timeline of how the project developed.

See the full timeline

You can also read reports below on the testing and other related subjects.


More resources

The final rule

We issued the final rule on November 20, 2013. See the rule and learn more about what it means for industry.

Learn more about mortgages

»What the disclosures and the rest of the rule mean for consumers
»From our blog: more about how we got here
»Be part of the first group to try out new tools to help consumers shop for mortgages

Reports

»Testing disclosure prototypes before issuing the proposed rule
»Qualitative testing of the new disclosures for a refinancing loan, for both English- and Spanish-speakers
»A quantitative validation study of the new disclosures that are included in the final rule
»A report on our discussions with small businesses