What is a closing disclosure?

A closing disclosure is a crucial document in the real estate transaction process, specifically related to the final terms of a mortgage loan. It provides a comprehensive summary of all the costs involved in the closing transaction, including loan terms, monthly payments, interest rates, and itemized fees such as closing costs. This document is designed to ensure that borrowers are fully informed about their mortgage obligations and the financial implications of their loan before the transaction is finalized.

This clarity is essential as it protects consumers by allowing them to compare costs and terms, ensuring transparency between lenders and borrowers. The closing disclosure must be provided to borrowers at least three days before their scheduled closing, allowing time for them to review its contents and ask questions if needed.

In contrast, the other options involve various aspects of real estate but do not pertain specifically to the finalization of mortgage loans. For example, a summary of housing market trends offers insights into market conditions, a notification of property taxes due pertains to local taxation, and a financial statement for homeowners generally refers to a broader overview of a homeowner's financial situation rather than the specifics of a mortgage loan agreement.