How to Read a Texas Closing Disclosure Line by Line 2026

How to Read a Texas Closing Disclosure Line by Line 2026

Why Your Closing Disclosure Deserves More Than a Quick Glance

Most Texas homebuyers receive the Closing Disclosure (CD) three business days before closing, scan the bottom-line cash-to-close number, and file the rest away. That is an expensive habit. The CD is a five-page federal form that contains every fee, credit, proration, and loan term in your transaction. Errors in it are common, and some of those errors cost buyers hundreds or thousands of dollars. Texas adds its own layer of complexity: promulgated title insurance rates from the Texas Department of Insurance (TDI), Municipal Utility District (MUD) tax prorations, Public Improvement District (PID) assessments, Section 50(a)(6) cash-out disclosures, and homestead designation lines that all appear on Texas closings but may be unfamiliar to buyers relocating from other states.

TL;DR / Quick Answer: Your Closing Disclosure must be delivered at least three business days before closing under the federal TRID rule. In a $400,000 Spring TX purchase, typical total closing costs run $8,000 to $12,000 for buyers, with Texas owner's title insurance on a $400,000 policy costing $2,555 under 2026 TDI promulgated rates (effective March 1, 2026, after a 6.2 percent rate reduction). Read every line on Pages 1 through 3 against your original Loan Estimate before you sign.

The TRID Framework: What the CD Is and When You Must Get It

The Closing Disclosure replaced the old HUD-1 Settlement Statement when the Consumer Financial Protection Bureau's TILA-RESPA Integrated Disclosure (TRID) rule took effect in 2015. TRID applies to most closed-end consumer mortgage transactions, including conventional, FHA, and VA purchase loans. HELOCs and reverse mortgages use different forms.

Under TRID, your lender must ensure you receive the CD at least three business days before closing. "Business days" for this rule means all calendar days except Sundays and federal public holidays, so a closing scheduled on a Wednesday requires CD delivery by the preceding Saturday at the latest. If the lender emails it, the three-day period starts the day it is sent. If it is mailed, an additional three-day mailing presumption applies.

Three events trigger a new CD and a reset of the three-business-day clock:

1. The Annual Percentage Rate (APR) becomes inaccurate (increases by more than 0.125 percent for fixed-rate loans).
2. The loan product changes (from fixed-rate to adjustable-rate, for example).
3. A prepayment penalty is added.

A simple fee increase, a change in sellers' concessions, or a prorated tax adjustment does not restart the clock. Buyers sometimes think any change to the CD means a new three-day wait; that is not correct.

The CFPB maintains the official TRID forms, samples, and compliance resources on its website, including annotated sample Closing Disclosures that label every field.

Page 1: Loan Terms, Projected Payments, and Costs at Closing

Page 1 is the executive summary of your loan and transaction. It contains four sections.

Loan Terms Table (top right). This table shows your loan amount, interest rate, monthly principal and interest, prepayment penalty (yes or no), and balloon payment (yes or no). Confirm these match your rate lock confirmation and your Loan Estimate. A wrong interest rate here is not a typo you can fix at the table; it requires a corrected CD.

Projected Payments. This section shows what you will pay monthly broken into components: principal and interest, mortgage insurance (if applicable), and estimated escrow for taxes and insurance. In Spring TX, an estimated escrow for a $400,000 home commonly runs $900 to $1,200/month when you include Harris County MUD taxes, school district taxes, and homeowners insurance. The CD splits these into separate line items.

Costs at Closing. This is a two-line summary: Closing Costs (the detailed breakdown appears on Page 2) and Cash to Close (detailed on Page 3). These are the two numbers most buyers jump to first. Do not stop here; the details behind them are on the next two pages.

Loan Information Box. Identifies the loan type (Conventional, FHA, VA, USDA, or Other), loan ID number, MIC/case number (FHA or VA), and the purpose (Purchase or Refinance). Texas Section 50(a)(6) cash-out refinances will have a specific notation here as well.

Page 2: The Line-by-Line Cost Breakdown

Page 2 is the most detailed page and the most likely place to find errors. Costs are divided into two main columns: Borrower-Paid (at closing and before closing) and Seller-Paid.

Section A: Origination Charges

These are fees charged by your lender for making the loan. They include origination points, underwriting fees, and application fees. Under TRID tolerance rules, Section A charges cannot increase from your Loan Estimate at all (zero tolerance), unless you had a valid change of circumstance. If your Loan Estimate showed a $1,500 underwriting fee and the CD shows $1,800, your lender must either justify the change with a documented changed circumstance or reduce the fee back down.

Section B: Services You Cannot Shop For

Appraisal fee, credit report, flood determination, tax monitoring, and similar lender-required services that you had no choice over. These have a 10 percent aggregate tolerance; the total of Section B charges on the CD cannot exceed the Loan Estimate total by more than 10 percent. If it does, the lender owes you a refund within 60 calendar days of closing.

Section C: Services You Can Shop For

Title insurance premiums, settlement agent fees, survey costs, and other third-party services where you were given a provider list and could choose your own company. In Texas, this includes owner's title insurance and the lender's title policy. Zero tolerance applies if you chose a provider from the lender's written list; 10 percent aggregate tolerance applies if you chose your own provider.

Texas Title Insurance R-Rates on Page 2

This is where Texas homebuyers who moved from other states are sometimes confused. Title insurance premiums in Texas are not negotiated; they are set by the TDI through promulgated rates. Effective March 1, 2026, TDI reduced basic premium rates by 6.2 percent under Commissioner Order No. 2025-9697.

Under the current TDI 2026 rate table, a $400,000 owner's title policy is calculated as follows: take the face amount above $100,000 ($300,000), multiply by 0.00494, add $780 base, for a total of approximately $2,262. The lender's title policy is typically issued simultaneously at a reduced simultaneous-issue rate, often $100 or less for the incremental coverage.

You will see both the owner's policy and the lender's policy on Page 2. In Texas, custom and TREC contract language typically make the owner's policy a seller-paid item and the lender's policy a buyer-paid item, though this is negotiable. Confirm which party is paying which on your CD.

Section D: Total Loan Costs

Section D is the sum of A, B, and C. This is the subtotal of lender and third-party loan costs before prepaid items and initial escrow deposits.

Section E: Taxes and Other Government Fees

Recording fees for the deed and deed of trust, and transfer taxes if applicable. Texas does not have a state deed transfer tax, so this section is typically limited to county recording fees. Harris County charges $30 for the first page and $4 for each additional page for deed recording.

Section F: Prepaids

Prepaids include prepaid interest (from closing date through the end of the first month), homeowner's insurance premium paid in advance (usually 12 months), and prepaid mortgage insurance if applicable. These are not lender fees; they are costs of homeownership that happen to be collected at closing.

Prepaid interest example: On a $370,000 loan at 7 percent, the daily interest rate is approximately $71. If you close on May 15, you prepay 17 days of interest (May 15 through May 31): $1,207. Buyers who close near the end of the month pay less prepaid interest, which can improve cash-to-close slightly.

Section G: Initial Escrow Payment at Closing

The lender collects an upfront escrow cushion at closing: typically two months of property taxes and two months of homeowners insurance. On a Spring TX home with a combined Harris County and Harris County MUD tax rate of approximately 2.4 percent (which is common in areas with Precinct 3 MUD overlays), annual taxes on $400,000 are approximately $9,600. Two months escrow: $1,600. Plus two months homeowners insurance at $175/month: $350. Total initial escrow: approximately $1,950.

Section H: Other

Other costs not captured above, including home warranty, HOA transfer fees, owner's title endorsements, and similar items. In Texas, HOA transfer certificate fees of $75 to $200 are common in planned communities.

Page 3: Cash to Close and Summaries of Transactions

Page 3 is divided into two main parts: the Calculating Cash to Close table and the Summaries of Transactions.

Calculating Cash to Close

This table builds from total closing costs (from Page 2) and works backward to arrive at the final amount you must bring to closing. The key adjustments:

• Total Closing Costs: Sum of Pages 2 Sections A through H.
• Closing Costs Paid Before Closing: Any fees paid upfront (earnest money applied to costs, appraisal fee paid outside closing).
• Down Payment/Funds from Borrower: Your down payment amount. On a $400,000 purchase with 5 percent down, this is $20,000.
• Deposit (Earnest Money): Your earnest money appears here as a credit. A typical $5,000 earnest money deposit reduces cash to close by $5,000.
• Seller Credits: If the seller agreed to pay $8,000 toward buyer closing costs, that credit appears here.
• Adjustments and Other Credits: Includes prorations for property taxes.

The result is the Cash to Close figure that you must wire or bring as a certified check.

Summaries of Transactions

This section shows two side-by-side ledgers: the borrower's transaction and the seller's transaction. It is the most Texas-specific section of the CD because it is where MUD and PID prorations, and other Texas-specific charges, appear.

Property Tax Proration. Texas taxes are paid in arrears, meaning the 2026 tax bill for the period January 1 to December 31 is not due until January 31, 2027. When a transaction closes in, say, June 2026, the seller owes taxes from January 1 through the day before closing. The title company calculates a per-day rate based on the prior year's tax bill (or an estimate if the bill has not been certified) and debits the seller for that share. The buyer is credited that same amount. This proration typically shows in Summaries of Transactions as "City/Town Taxes" or "County Taxes."

MUD and PID Prorations. Municipal Utility Districts and Public Improvement Districts are taxing entities separate from county and school district taxes. Under Texas Water Code Chapter 49, sellers in MUD areas must provide buyers a written MUD disclosure notice at or before contract execution. The MUD tax rate appears in the Summaries of Transactions as a separate proration line. In some Spring TX subdivisions, combined MUD tax rates add 0.35 to 0.60 percent to the property's overall tax burden. PID assessments under Texas Local Government Code Chapter 372 appear separately. Confirm that both the MUD and PID lines on your CD match the rates disclosed in the MUD/PID addendum attached to your TREC contract.

Homestead Designation. The Closing Disclosure itself does not file a homestead exemption on your behalf; that requires a separate Form 50-114 filed with the Harris County Appraisal District (HCAD). However, the closing agent may note homestead designation references in the deed. New owners in 2026 benefit from the increased $140,000 school district homestead exemption approved by Texas voters in November 2025 (Proposition 13). File Form 50-114 with HCAD at hcad.org as soon as you receive your deed.

Page 4: Loan Disclosures

Page 4 contains required federal disclosures about your loan features. Key sections:

Assumption. States whether or not your loan may be assumed by a future buyer if you sell. Most conventional loans say "No," meaning the due-on-sale clause prevents assumption. FHA and VA loans say "Yes," which has become a significant marketing feature for sellers locked in at low rates.

Demand Feature. Discloses whether the lender can demand immediate full repayment under specified conditions.

Late Payment. The grace period (typically 15 days for most Texas mortgages) and the late fee amount (usually 4 to 5 percent of the overdue payment).

Negative Amortization. Discloses whether payments can be lower than the interest accruing, which would increase your loan balance. For standard fixed-rate loans, this will say "No."

Partial Payments. Describes what the lender will do with payments that are less than the full amount due.

Texas Section 50(a)(6) Cash-Out Boxes

If you are refinancing and taking cash out in Texas, the lender is required to comply with the Texas Constitution Article XVI, Section 50(a)(6) (commonly called Texas 50(a)(6) or "home equity loan" rules). The TRID Closing Disclosure for a Section 50(a)(6) loan must include additional disclosures:

• The loan cannot exceed 80 percent of the home's fair market value (maximum 80 percent LTV at origination).
• The borrower must receive all required disclosures at least 12 business days before closing, and the loan cannot close earlier than 12 days after those disclosures are received.
• The three-day right to rescind applies under TILA.
• The property must be the borrower's homestead.

Per Fannie Mae's selling guide on Texas Section 50(a)(6) loans, the title policy must include a Texas Land Title Association Equity Loan Mortgage Endorsement (Form T-42) and a Supplemental Coverage Equity Loan Mortgage Endorsement (Form T-42.1). These endorsement costs appear in Section C of Page 2.

Page 4 of the CD includes a specific "Texas Home Equity Loan" box for 50(a)(6) transactions that confirms the loan is originated under these constitutional constraints.

Page 5: Loan Calculations, Contact Information, and Confirm Receipt

Page 5 completes the document with summary calculations and disclosure sign-off.

Loan Calculations. Shows the total of all payments you will make over the full loan term (for a 30-year loan, that is 360 payments), the total finance charge, the amount financed (loan amount minus prepaid finance charges), the APR, and the Total Interest Percentage (TIP), which shows what percentage of the loan amount you will pay in interest over the life of the loan.

On a $370,000 loan at 7 percent over 30 years: total of all payments is approximately $886,960, total interest paid is approximately $516,960, and the TIP is approximately 139.7 percent. These are disclosure figures, not negotiating points, but they illustrate the long-term cost of financing.

Contact Information. Page 5 lists the names and contact details of the lender, mortgage broker (if any), real estate agent for the buyer, real estate agent for the seller, and settlement agent (title/escrow company). Verify that your agent's name and license number are correct. TREC requires licensed real estate brokers and agents in Texas to include their license numbers in transaction documents.

Confirm Receipt. This is where you sign or initial to acknowledge receiving the CD. Signing does not mean you agree to proceed with the loan; it only confirms receipt. You may still back out within the three-day review period without penalty if you choose not to close.

Worked Example: Spring TX $400,000 Purchase, Page-by-Page

The Transaction. A buyer purchases a home in the Champions area of Spring (ZIP 77379) for $400,000. Loan amount: $370,000 at 7 percent fixed, 30-year term, conventional with 7.5 percent down ($30,000). Closing date: May 15, 2026.

Page 1 Highlights: - Loan Amount: $370,000 - Interest Rate: 7.000% - Monthly Principal and Interest: $2,463 - Estimated Escrow: $1,050/month (taxes and insurance) - Projected Payment: $3,513/month - Total Costs at Closing: $11,420 (before credits) - Cash to Close: $37,420 (before credits)

Page 2 Highlights: - Section A (Origination): $3,700 (1 percent origination point) - Section B (Required services): $850 (appraisal $550, credit report $40, flood certification $20, tax monitoring $240) - Section C (Chosen services): $2,555 (owner's title policy at TDI 2026 rate) + $130 (lender's simultaneous policy) + $400 (survey) = $3,085 - Section E (Recording fees): $130 - Section F (Prepaids): $1,207 prepaid interest (17 days) + $2,100 homeowners insurance (12 months) = $3,307 - Section G (Initial escrow): $1,600 (2 months taxes) + $350 (2 months insurance) = $1,950 - Total Closing Costs: approximately $13,022

Page 3 Highlights: - Total Closing Costs: $13,022 - Down Payment: $30,000 - Earnest Money Credit: ($5,000) - Seller Concession Credit: ($8,000) - Property Tax Proration Credit to Buyer: approximately ($3,840) (covering January 1 through May 14 at $9,600/year) - MUD Tax Proration Credit to Buyer: approximately ($560) (covering 135 days at approximately $1,520/year MUD tax) - Cash to Close: approximately $25,622

Page 4 Highlights: - Assumption: No (conventional loan) - Late Payment: 15-day grace, 5 percent fee - No negative amortization, no demand feature

Page 5 Highlights: - Total of All Payments: $886,960 - Total Interest Paid: $516,960 - TIP: 139.7% - APR: 7.094%

Common Errors Buyers Miss on the Texas Closing Disclosure

1. Wrong proration base. The title company estimates tax prorations based on the prior year's tax bill. If the home's appraised value jumped significantly, the current year's taxes will be higher, and you may owe an adjustment later. Ask the title company if they are using the current year's certified value or the prior year's bill.

2. Duplicate or incorrect HOA charges. HOA transfer fees and initiation fees sometimes appear twice, once in Section H and once in the Summaries of Transactions. Verify the total with your HOA's confirmation letter.

3. Missing seller credits. If your contract specifies a seller concession of $8,000 but the CD only shows $6,000, catch it before closing. The title company must reconcile the contract terms exactly.

4. Wrong loan type box. FHA loans with mortgage insurance premiums (MIP) sometimes have the MIP amount miscalculated. The upfront FHA MIP is 1.75 percent of the base loan amount. On a $370,000 FHA loan, that is $6,475, which is typically financed into the loan. Confirm the MIP amount on Page 2 matches the loan terms.

5. Incorrect Texas owner's title policy premium. Texas title rates are promulgated, meaning they are fixed by TDI. If the premium for a $400,000 policy on Page 2 differs from the TDI table calculation, ask for a written explanation. There is no negotiating room on the basic premium; there is only room for error.

6. MUD vs. PID confusion. The CD Summaries of Transactions must show separate proration lines for MUD and PID if the property is subject to both. If your contract addendum disclosed both but only one appears on the CD, flag it with the title company before signing.

The Three-Day Rule in Practice: Your Window to Review

TRID's three-business-day review window is a buyer protection, not a formality. Use it systematically:

Day 1 (as soon as you receive the CD): Compare Page 1 loan terms to your rate lock confirmation. Check that the loan amount, interest rate, and loan type are correct.

Day 2: Compare Page 2 Sections A through C line-by-line to your Loan Estimate. Flag any increases exceeding tolerance limits. Verify the Texas title insurance premium against the TDI 2026 rate table.

Day 3: Review Page 3 Summaries of Transactions. Verify all credits from the contract (seller concessions, earnest money) are reflected. Check every proration line: county taxes, school district taxes, MUD taxes, PID assessments, HOA dues.

Contact your lender and title company with any questions. Arriving at the closing table with unresolved questions creates pressure to sign anyway. The three-day period exists precisely to prevent that.

Per the CFPB's TRID resources, sample annotated Closing Disclosures are publicly available to help buyers identify each field by name and purpose.

Internal Resources for Texas Homebuyers

These guides from the Harbert Real Estate Group address related topics that Texas buyers often need alongside their Closing Disclosure review:

• Texas solar panel loan and home sale impact 2026 covers how financed solar panels appear in the settlement statement and what buyers must do when assuming a solar loan.
• Texas homestead exemption property tax guide 2026 explains how to file Form 50-114 after closing to lock in the $140,000 school district exemption and the 10 percent appraisal cap.
• Texas mineral rights home sale 2026 addresses subsurface interest disclosures that affect Houston-area buyers.
• Best Houston suburbs for commuters to downtown 2026 provides cost-of-living context for buyers comparing Spring TX to other Houston-area suburbs before finalizing their purchase decision.

Frequently Asked Questions

What triggers a new three-day waiting period on a Texas closing?

Three specific changes require a revised Closing Disclosure and a new three-business-day review window: the APR increasing by more than 0.125 percent (for a fixed-rate loan), the loan product changing (such as from fixed-rate to adjustable-rate), or a prepayment penalty being added. A fee adjustment, a change in seller credits, a proration correction, or a change in the cash-to-close amount does not restart the clock. This is one of the most misunderstood aspects of TRID, and buyers who refuse to sign due to minor corrections after the original three-day period may cause unnecessary closing delays.

How do I calculate the Texas title insurance premium on a $400,000 purchase?

Using the TDI 2026 promulgated rate table (effective March 1, 2026): for a policy above $100,000, subtract $100,000 from the face amount ($400,000 minus $100,000 equals $300,000), multiply by 0.00494 ($1,482), and add the base of $780. The result is $2,262 for the basic premium. Endorsements and simultaneous-issue lender policy rates are calculated separately. The TDI publishes the full rate table at tdi.texas.gov/title/titlerates2026.html.

What is the MUD proration on a Texas Closing Disclosure and how is it calculated?

A Municipal Utility District tax proration appears in the Summaries of Transactions section of Page 3. The title company calculates the MUD tax rate per day (annual MUD tax divided by 365), multiplies by the number of days the seller owned the property in the current tax year, and credits that amount to the buyer. For example, a Spring TX home with a $1,440 annual MUD tax closing on May 15 (135 days into the year) would show a seller debit and buyer credit of approximately $532. The buyer pays MUD taxes from May 15 forward. Confirm the MUD tax rate matches the rate in the MUD addendum signed at contract.

What does Section 50(a)(6) mean on a Texas Closing Disclosure?

Article XVI, Section 50(a)(6) of the Texas Constitution governs home equity loans (cash-out refinances) on homestead property in Texas. A loan originated under these rules appears on the Closing Disclosure with specific notations on Page 4: the LTV cannot exceed 80 percent, the borrower must have received all disclosures at least 12 business days before closing, and the right to rescind is documented. The title policy requires specific endorsements (Form T-42 and T-42.1). These rules apply only to cash-out refinances of Texas homestead property; purchase loans and rate-and-term refinances are not subject to Section 50(a)(6).

Can fees increase between my Loan Estimate and Closing Disclosure?

Yes, within limits. Section A (lender origination charges) and certain Section B services cannot increase at all (zero tolerance). Section C services you chose from the lender's list also have zero tolerance. Section B services where you could not shop, and Section C services you chose yourself, have a 10 percent aggregate tolerance. Prepaid items, initial escrow amounts, and homeowners insurance may change based on actual amounts. If any zero-tolerance fee increased without a valid changed circumstance, the lender must cure the difference within 60 days of closing by refunding the excess.

How does the homestead exemption filing relate to the Closing Disclosure?

The Closing Disclosure does not file your homestead exemption. It may reference the homestead designation in the deed, and the title company may note that the property qualifies as a homestead for deed-of-trust purposes. But to receive the $140,000 school district property tax exemption (effective 2025 and 2026 under Texas Proposition 13), you must separately file Form 50-114 with your county appraisal district after closing. In Harris County, file with HCAD at hcad.org. The deadline is April 30 of the tax year, but late applications for up to two prior years are accepted.

Ready to Review Your Closing Disclosure Together?

A Closing Disclosure is not a document to skim. If you are purchasing a home in Spring TX or anywhere in the Harris County metro and you want an experienced real estate professional to walk through the numbers with you before closing, Erick Harbert at The Harbert Real Estate Group at Realty Right has done it hundreds of times.

Erick Harbert The Harbert Real Estate Group at Realty Right 6605 Cypresswood Dr Ste 300, Spring TX 77379 Phone: (281) 305-2520 Email: [email protected] Website: harbertgroup.com

Sources: CFPB TRID Compliance Resources; TDI Texas Title Insurance Premium Rates 2026; TDI 2026 Rate Rule Summary (Commissioner Order 2025-9697); Fannie Mae Selling Guide: Texas Section 50(a)(6) Loans; TREC Texas.gov Contracts and Forms