What is a "closing disclosure"?

A "closing disclosure" is a document that provides a detailed summary of the loan terms and all closing costs associated with a real estate transaction. It is designed to give the borrower a clear view of the financial aspects of their mortgage loan before finalizing the transaction. This document outlines key information such as the loan amount, interest rate, monthly payments, and all applicable fees, allowing buyers to properly understand their financial obligations.

Unlike a notice of foreclosure status, which pertains to properties in danger of losing ownership due to unpaid debts, the closing disclosure is a proactive tool used during the final stages of a property purchase. It differs from an agreement to lower sale prices, as that would pertain directly to negotiations between the buyer and seller regarding the purchase price rather than the details of financing. Additionally, a certificate of property inspection is related to the condition of the property and does not address the financial terms of the loan. The closing disclosure is a critical component in the home-buying process that ensures transparency and informed decision-making regarding loans.