What is the purpose of a "closing disclosure"?

The purpose of a "closing disclosure" is to provide a comprehensive summary of the final loan terms and costs associated with a mortgage transaction to the borrower before the closing takes place. This document ensures that the borrower has a clear understanding of the financial implications of their loan, including the interest rate, monthly payments, other costs such as taxes and insurance, and any fees associated with the closing process. By presenting all relevant financial information in a transparent manner, the closing disclosure helps borrowers make informed decisions about their mortgage, and it allows them to compare the terms with their original loan estimate. This focus on clarity and disclosure is critical in preventing misunderstandings or surprises at the closing table.

The other choices do not align with the primary function of the closing disclosure, which is specifically focused on loan details, rather than maintenance responsibilities, buyer identity verification, or property tax obligations.