What is a closing disclosure?

A closing disclosure is a form that outlines the final terms and costs of a mortgage, providing borrowers with essential details just before the loan closing process. This document consolidates all important financial information, including loan terms, projected monthly payments, fees, and the total closing costs involved in the transaction.

The closing disclosure is designed to help borrowers understand the financial commitments they are making, allowing them to compare the final terms with the initial loan estimate they received earlier in the mortgage process. This transparency is crucial, as it ensures that consumers are fully informed about the costs associated with their mortgage before they finalize the purchase of their home.

By receiving this document three days before closing, borrowers have the opportunity to review the information, ask questions, and rectify any discrepancies. Therefore, the closing disclosure plays a vital role in promoting informed decision-making and consumer protection in real estate transactions.