How to Read a Texas Closing Disclosure Line by Line: 2026 Buyer Guide

How to Read a Texas Closing Disclosure Line by Line: 2026 Buyer Guide

What Is the Closing Disclosure and Why Does Every Line Matter?

Three business days before your Texas closing, your lender is legally required to deliver your Closing Disclosure (CD). This five-page document is the final accounting of your entire mortgage transaction: what you are borrowing, what you are paying, and exactly how much cash you need to bring to the table. Most buyers scan it quickly and sign. That is a costly mistake.

TL;DR / Quick Answer: On a $385,000 conventional purchase in Spring, TX (ZIP 77379), expect total buyer-paid closing costs of roughly $9,800 to $12,500 before prepaids and escrow, plus another $6,000 to $8,500 in prepaid items and initial escrow deposits. The most common errors on Texas CDs are a wrong APR caused by missed finance charges, a missing or misapplied lender credit, and property tax prorations calculated on the prior year's rate rather than a corrected current estimate. A five-minute review of the sections below can save you real money at the table.

The TRID Framework: What the CD Replaced and How It Is Organized

The Consumer Financial Protection Bureau's TRID rule (TILA-RESPA Integrated Disclosure) replaced the old HUD-1 Settlement Statement and the final Truth-in-Lending disclosure with a single standardized form effective October 3, 2015. Every residential mortgage in the country now uses the same five-page CD format.

The CD mirrors the Loan Estimate (LE) you received within three business days of application. One of the CD's primary jobs is to let you compare what was estimated against what you are actually being charged. The TRID rule divides costs into tolerance buckets:

• Zero tolerance (Section A and B): Fees that cannot increase at all from the LE. These include origination charges, appraisal, credit report, tax service fee, and flood determination fee.
• 10% aggregate tolerance (Section C): Third-party services you were permitted to shop. The sum of these cannot increase more than 10% from the LE.
• Unlimited tolerance (Sections E, F, G, H): Prepaid items, escrow setup, and certain other costs that fluctuate with actual conditions (insurance premiums, real tax rates, days of prepaid interest).

If any zero-tolerance or 10%-bucket fee is higher on your CD than on your last Loan Estimate, the lender owes you a lender credit (cure) for the excess. Verify this before signing.

Page 1: Loan Terms and Projected Payments

Page 1 is your summary. The top box confirms your loan amount, interest rate, monthly principal and interest, whether the rate can rise, and whether the loan has a prepayment penalty or balloon payment.

The Projected Payments table below it breaks down the estimated monthly cost across four time brackets (initial fixed period, then any adjusting periods). Each bracket shows:

• Principal and interest (P&I)
• Mortgage insurance (PMI/MIP, or $0 for VA)
• Estimated escrow for taxes and insurance

For a $385,000 purchase in Spring TX 77379 with a 10% down payment and a 30-year conventional loan at 6.75%, here is what the Page 1 summary looks like:

The Costs at Closing box at the bottom of page 1 summarizes two numbers: total closing costs (the sum of Sections A through H on page 2) and the cash-to-close figure. Always confirm these match what you were expecting based on your last Loan Estimate.

Page 2: The Closing Cost Details Section by Section

Page 2 is where buyers need to spend the most time. It divides costs into two main tables: Loan Costs and Other Costs.

Section A: Origination Charges (Zero Tolerance)

Section A lists every fee the lender charges for making the loan: origination fee, discount points (if any), underwriting fee, processing fee, and any other lender-specific charge. These are zero-tolerance items: the total cannot increase from the Loan Estimate.

On our $385K Spring TX example, typical Section A charges from a retail lender:

Watch for lenders who quoted zero origination on the LE and then sneaked in an "administration fee" or "document preparation fee" in Section A on the CD. Any item that was not on the LE and appears in Section A is a zero-tolerance violation requiring a cure.

Section B: Services You Cannot Shop For (Zero Tolerance)

Section B covers third-party services that the lender selects, meaning you cannot comparison-shop them. Common items:

One frequent error: third-party document preparation fees or MERS registration fees sometimes appear in Section A instead of Section B. Misclassification matters because Section A affects the lender's compensation disclosure.

Section C: Services You Can Shop For (10% Aggregate Tolerance)

Section C covers services where you were given a choice of providers. Title-related fees almost always land here. For Texas buyers, key Section C items include:

• Lender's title insurance (T-2 policy): At simultaneous issue, this is $100 per TDI rules. If you see a number significantly higher, ask whether the owner's policy is being issued simultaneously. If both policies are being issued at the same closing, the lender's policy should reflect the simultaneous issue price.
• Title search / examination fee: Varies by company; typically $150 to $300.
• Settlement/escrow fee: $350 to $700 at most Spring/North Houston title companies.
• Survey fee: $450 to $650 for a new survey; $0 if the seller provides a current survey you can reuse.

The T-2 simultaneous issue note for Texas buyers: Texas promulgated rates require the T-2 (lender's mortgagee policy) to be issued at $100 when a T-1 (owner's) policy is issued simultaneously by the same title company. On the CD, the lender's policy may appear at its full calculated premium in Section C, with an offsetting credit appearing elsewhere. Net result should equal $100. If you see $1,200+ for the lender's policy with no corresponding credit, ask your title officer to clarify. Our Texas Title Insurance guide walks through the full simultaneous issue mechanics.

Sections E and F: Taxes, Government Fees, and Prepaids

Section E: Taxes and Other Government Fees

This section captures recording fees and any transfer taxes. Texas has no real estate transfer tax, which is a meaningful advantage over many other states that charge 1% to 2% of the purchase price. What you do see:

• Recording fee for the deed: $20 to $40 (Harris County records online at about $25 per document)
• Recording fee for the deed of trust (mortgage): $20 to $40
• No Texas transfer tax

Section F: Prepaids

Prepaids are not fees: they are your own money being collected in advance for specific insurance and interest obligations.

Closing near the end of the month minimizes prepaid interest. A buyer closing June 28 vs. June 5 on the same loan saves roughly $1,472 in prepaid interest at closing ($64/day x 23 days less).

Section G: Initial Escrow Payment at Closing

The escrow cushion is the money your lender collects to seed your impound account. Federal law (RESPA Section 10) limits the cushion to two months of the highest aggregate escrow month.

For our $385K Spring TX 77379 example with Klein ISD and a typical MUD:

• Klein ISD tax rate (2025): $1.0119 per $100 valuation (confirmed by Klein ISD)
• Harris County rate: approximately $0.37 per $100
• MUD rate (Harris County MUD 501, typical for 77379): $0.60 per $100
• Harris County Flood Control District: approximately $0.03 per $100
• Harris County Department of Education: approximately $0.0048 per $100
• Port of Houston Authority: approximately $0.0075 per $100
• Approximate combined rate: $2.02 per $100 valuation

On a $385,000 assessed value: annual taxes ~$7,777. Monthly escrow for taxes: ~$648. Plus $267/month for homeowners insurance ($3,200/yr). Two-month cushion: ($648 + $267) x 2 = ~$1,830 initial escrow deposit at closing. Some lenders collect more depending on when closing falls relative to tax payment due dates.

Important note on Texas property tax prorations: Texas taxes are paid in arrears. At closing, the seller owes their prorated share from January 1 through the closing date. For a June 15 closing, the seller owes approximately 165/365 of the estimated annual taxes. Because the actual tax bill is not certified until October each year, title companies use prior-year rates adjusted upward (typically 5 to 10%) to estimate prorations. This estimated credit to the buyer appears on the CD in Section L (seller credits) or as a line item adjustment on page 1. Check that the proration looks reasonable given the current tax rate; using the prior year's rate without adjustment is a common error.

Page 3: Calculating Cash to Close and the Summaries of Transactions

Page 3 is where everything comes together. The top portion, Calculating Cash to Close, is a comparison table showing the last Loan Estimate figures next to the final CD figures, with a "Did This Change?" column.

For our Spring TX example:

The Summaries of Transactions table below that (Section J for the borrower, Section K for the seller) itemizes every dollar flowing in and out of the transaction. Confirm that the seller credit matches what your contract specified in TREC Paragraph 12A(1)(c), and that any lender credit negotiated in your rate-lock appears as a negative number in Section J.

Lender Credit Math: A Common Error

If your rate-lock included a lender credit (for example, you took a 7.0% rate instead of 6.75% in exchange for a $2,500 lender credit), that credit must appear as a negative dollar amount in Section J, labeled "Lender Credits." If it is missing from the CD, the lender has violated zero-tolerance rules and must provide a cure before or at closing. Do not accept a verbal promise to fix it later.

Page 4: Loan Disclosures

Page 4 contains the legal disclosures about your specific loan product:

• Assumption: Whether the loan may be assumed by a future buyer (most conventional loans are not assumable; VA and FHA loans generally are)
• Demand feature: Whether the lender can demand full repayment before maturity (rare on purchase loans)
• Negative amortization: Whether minimum payments could result in a growing balance (uncommon on standard purchases)
• Partial payments: How partial payments are handled
• Security interest: Confirmation of the lien the lender holds
• Escrow account: Whether escrow is required and what it covers

All checkboxes must be completed. Examiners consistently find that lenders leave these fields blank, which is a regulatory violation per CFPB compliance guidance.

Page 5: Loan Calculations and APR

Page 5 is where the Annual Percentage Rate (APR) is disclosed. The APR is higher than your interest rate because it factors in most finance charges over the life of the loan.

Common APR error: The APR on page 5 must incorporate all finance charges from page 2 that are defined as such under Regulation Z. If the lender's disclosure software fails to flag an underwriting fee or origination charge as a finance charge, the Amount Financed and APR will both be understated. Per Federal Reserve compliance data, discounted ARM loans and software miscalculations are the most frequent sources of APR errors.

The APR tolerance for a standard fixed-rate loan is one-eighth of one percentage point (0.125%). If the APR on your CD is more than 0.125% below what it should be based on the actual fees charged, the lender has an inaccuracy requiring correction.

Page 5 also includes the Total Interest Percentage (TIP): the total dollar interest you would pay over the full loan term divided by the loan amount, expressed as a percentage. On a 30-year $346,500 loan at 6.75%, the TIP is approximately 141%. That figure looks alarming but is normal for a 30-year fixed loan at current rates; it is meant to illustrate long-term cost, not to panic you.

Worked Example: $385K Spring TX Purchase, Conventional Loan

Here is the full closing cost picture for a buyer purchasing a $385,000 home in Spring, TX 77379 with a 10% down payment and a conventional 30-year loan at 6.75%.

Loan parameters - Purchase price: $385,000 - Down payment: $38,500 (10%) - Loan amount: $346,500 - Interest rate: 6.750% (30-year fixed) - Monthly P&I: ~$2,247 - PMI (0.60% on $346,500): ~$173/mo

Section A: Origination charges - Origination fee (0.5%): $1,733 - Underwriting fee: $895 - Processing fee: $495 - Total Section A: $3,123

Section B: Services cannot shop - Appraisal: $650 - Credit report: $50 - Flood determination: $18 - Tax service fee: $65 - Total Section B: $783

Section C: Services can shop (title-related) - Lender's title policy (T-2, simultaneous issue): $100 - Settlement/escrow fee: $525 - Title search fee: $195 - Survey (new): $575 - Total Section C: $1,395

Section E: Government fees - Deed recording: $30 - Deed of trust recording: $30 - Total Section E: $60

Section F: Prepaids - Homeowners insurance (12 months): $3,200 - Prepaid interest (15 days x $64/day): $960 - First PMI month: $173 - Total Section F: $4,333

Section G: Initial escrow - Taxes (2 months at $648/mo): $1,296 - Insurance (2 months at $267/mo): $534 - Total Section G: $1,830

Section H: Other - HOA disclosure fee: $350 - Title endorsements (T-19.1): $190 - Total Section H: $540

Grand total closing costs (A through H): ~$12,064 Down payment: $38,500 Less earnest money (already paid): ($3,500) Less seller concession of $5,000 toward closing costs: ($5,000) Estimated cash to close: ~$42,064

Owner's title policy (T-1) on this transaction: approximately $2,205 at the TDI promulgated rate (roughly: ($385,000 - $100,000) x $0.00494 + $780 = ~$2,189, rounded). This is customarily paid by the seller in Texas and does not appear in the buyer's Section C; it appears as a seller-paid cost on the seller's column of page 2.

Texas-Specific Items to Flag to Your Title Officer Before Closing

Texas transactions carry several unique disclosures and requirements that do not apply in most other states. Before sitting down at the closing table, confirm the following with your title officer:

T-2 Mortgagee Policy and Simultaneous Issue Verification

The TDI Form T-2 is Texas's promulgated lender's title policy. Confirm with your title officer that the T-2 is being issued simultaneously with the T-1 (owner's) policy so that the lender's policy price is $100, not its full-price equivalent of roughly $1,700 to $1,900 on a transaction this size. This is standard practice, but misapplied simultaneous issue pricing is one of the more common title errors in Texas closings.

MUD and PID Disclosure

Under Texas Water Code Section 49.452, the seller is required to provide written notice to the buyer of any Municipal Utility District (MUD) affecting the property. This notice must be signed by both parties and must state the current MUD tax rate and the amount of outstanding bonds. At closing, a copy of the notice must be recorded in the deed records of the county.

For 77379 Spring TX properties, many sit in Harris County MUDs including MUD 501 (total rate approximately $0.60 per $100 in 2024-2025), MUD 208, MUD 502, or other districts. Confirm with your title officer that the MUD notice on file matches the actual MUD for the property you are purchasing, that the bond balance is current, and that the notice has been signed. Failure to provide this notice gives the buyer the right to terminate the contract through closing day.

For properties in a Public Improvement District (PID), a separate Notice to Purchaser under Texas Local Government Code Chapter 372 is also required. PIDs are common in newer master-planned communities. Confirm with the title company whether a PID Notice is needed.

Survey Fee Handling

Texas title companies differ on whether they will accept an existing survey. If the seller provides a survey dated within the past 10 years with no boundary changes since issuance, many title companies will accept it, saving the buyer $450 to $650 in new survey costs. Ask your title officer specifically:

1. Will you accept the seller's existing survey?
2. If yes, do I need to purchase Survey Deletion (Area and Boundary) coverage as part of my T-19.1 endorsement?

If the existing survey is accepted and Survey Deletion is added via the T-19.1 endorsement, that endorsement costs 5% of the owner's policy basic premium (roughly $110 on a $385K transaction). If you order a new survey instead, budget $575 and plan for 7 to 10 business days for the surveyor to deliver a sealed plat.

Prorated Property Tax Accuracy

Texas taxes are certified in October; until then, title companies use estimates. For a June closing, the seller's proration should be calculated as approximately 165 days out of 365 multiplied by the estimated annual tax. On a $385,000 assessed value at a combined rate of approximately $2.02 per $100, annual taxes are roughly $7,777. A June 15 seller credit = 165/365 x $7,777 = approximately $3,514. If the proration credit on your CD looks like a round $3,000 or a suspiciously small number, ask the title officer to show you their calculation and confirm the estimated rate used.

For guidance on how these credits interact with your first year's homestead exemption filing, see our Texas Homestead Exemption guide.

Three Common CD Errors and How to Catch Them

Error 1: Wrong APR Due to Misclassified Finance Charges

If the origination fee, underwriting fee, or any lender-compensation item is not flagged as a finance charge in the lender's disclosure software, the Amount Financed will be overstated and the APR will be understated. Compare the APR on your CD to a manual calculation: take all fees in Section A that compensate the lender, add any prepaid interest, mortgage insurance premiums, and required service fees, and confirm the resulting APR is within 0.125% of the disclosed figure. Most lender websites have APR calculators you can use as a cross-check.

Error 2: Missing Lender Credit

If you locked a rate with a built-in lender credit (above-par pricing), that credit must appear in two places: as a negative amount in Section J under "Total Closing Costs (Borrower-Paid)" and in the "Costs at Closing" box at the bottom of page 1. If only one location shows the credit, or neither does, demand a corrected CD before closing. Per CFPB TRID FAQ guidance, reducing a lender credit below what was disclosed on the Loan Estimate is a tolerance violation requiring a cure.

Error 3: Prorated Taxes Calculated on Stale Rates

Title companies are permitted to use January 1 rate information for proration estimates, but some companies use the rate from two or even three years prior. In a rising-tax environment, this underestimates the seller's proration credit to the buyer. Ask your title officer: "What annual tax figure did you use to calculate the proration, and what year's rate is that based on?" If the answer is a tax rate more than two years old, negotiate for a current estimate or build in a post-closing adjustment mechanism.

Internal Resources for Related Texas Closing Topics

For a complete breakdown of what buyers and sellers pay at the closing table, see our Texas Closing Costs guide. For TDI-promulgated rate calculations, the simultaneous issue discount, and endorsement details, visit our Texas Title Insurance guide. Buyers whose credit score affects their rate and PMI tier should review our Credit Score Requirements to Buy a Home in Texas guide. If you have not yet received a Loan Estimate because you are still in the shopping phase, start with our Texas Mortgage Pre-Approval guide. And once you close, do not forget to file your Texas Homestead Exemption by April 30 of the following year to start saving on property taxes.

Frequently Asked Questions

What is the three-business-day rule for the Closing Disclosure in Texas?

Your lender must ensure you receive the initial Closing Disclosure at least three business days before consummation (your closing date). If a change later triggers a revised CD for a wrong APR, a change in loan product, or the addition of a prepayment penalty, the clock resets and you must wait another three business days after receiving the corrected CD. Business days for TRID purposes include Saturdays but not Sundays or federal public holidays. A closing scheduled for Friday that triggers an APR correction on Tuesday effectively pushes closing to the following Monday at the earliest.

Can I get a Closing Disclosure before the three-day window if I want more time?

Lenders are required to deliver the CD no later than three business days before closing, but nothing prevents them from sending it earlier. Ask your loan officer when to expect the CD as soon as you go under contract. Many experienced Texas title companies send a preliminary settlement statement 5 to 7 days before closing so you can review the numbers before the official CD arrives. This informal preview has no TRID legal weight but gives you time to catch errors without pressure.

What happens if a closing cost increases beyond the tolerance limit on my CD?

For zero-tolerance items (Sections A and B), any increase requires the lender to provide a lender credit at closing that exactly covers the excess. For 10%-bucket items (Section C), the lender owes a credit only if the aggregate increase in that bucket exceeds 10%. The lender credit appears as a negative number in Section J. If you receive a CD with higher fees than your LE and no corresponding credit, point it out to your loan officer before signing. The lender cannot cure a tolerance violation after closing in most cases.

How does the owner's title policy appear on my Texas CD if the seller pays for it?

On the buyer's Closing Disclosure, the seller-paid owner's title policy (T-1) appears in the "Paid By Others" or "Seller" column of Section C on page 2, not in the Borrower-Paid column. You will see the dollar amount but it does not come out of your cash to close. It is reflected in the Summaries of Transactions on page 3 as a seller credit toward your closing costs, effectively reducing the seller's net proceeds. Confirm the number matches the TDI promulgated premium for your purchase price.

Is the survey fee on my CD negotiable?

The fee itself is not negotiable after you have closed, but you can reduce or eliminate it before closing. If the seller provides a current survey acceptable to your title company (typically no more than 10 years old, with no boundary changes), many lenders and title companies will accept it. Ask your agent to include a contract term requesting the seller to provide any existing survey during the option period. If the title company accepts it, you save the survey fee entirely; if they require a new one, you will know early enough to budget for it.

How do Texas property tax prorations work on the Closing Disclosure?

Because Texas property taxes are paid in arrears, the seller owes taxes for the days they owned the property in the current calendar year. At closing, the title company calculates a credit from the buyer to the seller (or more commonly, reduces the seller's net proceeds) based on the estimated annual tax divided by 365, multiplied by the number of days the seller owned the property that year. The credit is estimated because the final certified tax rate is not published until October. Buyers should confirm the rate used in the calculation and understand that if the actual year-end rate is higher than estimated, there is typically no post-closing adjustment mechanism unless the contract specifically provides one.

Talk to an Agent Before You See That CD

The Closing Disclosure lands three business days before closing. At that point, your option period has already expired, your rate is locked, and major changes are difficult. The time to understand your closing costs is before you go under contract, not after.

Erick Harbert at the Harbert Real Estate Group at Realty Right walks buyers through closing cost estimates during the pre-offer stage so there are no surprises on page 1. The team is located at 6605 Cypresswood Dr Ste 300, Spring TX 77379, in the heart of the communities they serve.

Call (281) 305-2520, email [email protected], or visit harbertgroup.com to get a closing cost preview tailored to your target purchase price, loan type, and ZIP code before your search begins.