What is the function of the Closing Disclosure?

The Closing Disclosure serves a crucial role in the home financing process by providing borrowers with the actual loan terms and closing costs they will face at the time of closing. This document is required under the Truth in Lending Act and the Real Estate Settlement Procedures Act, ensuring that consumers receive detailed and clear information about the specifics of their loan arrangement, including the interest rate, monthly payments, and various fees associated with the closing process.

The Closing Disclosure is designed to be provided at least three business days before closing, allowing borrowers time to review and understand the final terms and costs. This ensures transparency and gives borrowers the opportunity to ask questions or address any concerns before they commit to the loan. In contrast, while estimated costs are outlined in other documents, such as the Loan Estimate, the Closing Disclosure is specifically focused on the confirmed, actual figures, making it distinct in its purpose and importance in the financing process.