What is a "closing disclosure"?

A closing disclosure is an essential document in the real estate transaction process, specifically related to mortgage loans. It is a final document that provides comprehensive details about the terms and costs associated with the mortgage. This includes information on loan terms, interest rates, monthly payments, and all closing costs that the borrower will incur. It is designed to ensure that borrowers have a clear understanding of the financial aspects of their loan before finalizing their purchase. Moreover, the closing disclosure is provided to borrowers at least three business days before closing, allowing them time to review the terms and ask any necessary questions.

This is fundamentally different from the initial offer of a property, as that would represent a preliminary agreement rather than a detailed financial breakdown. Legal documents related to ownership transfer are typically separate from the closing disclosure, addressing the conveyance of the property itself rather than the financing terms. Lastly, a property inspection summary report serves a distinct function entirely, focusing on the physical condition of the property rather than the financial obligations surrounding its purchase.