How is the "closing disclosure" utilized in real estate transactions?

The closing disclosure is a critical document in real estate transactions that summarizes the final terms, conditions, and costs associated with a mortgage. This document is provided to the buyer typically three days before the closing, allowing the borrower to review the financing terms and understand the closing costs involved in the transaction. It includes details about the loan amount, interest rate, monthly payments, and the total closing costs.

Understanding this document is essential for buyers because it helps them verify that they are receiving the terms they agreed upon in previous documents, such as the loan estimate. The ability to review these details before finalizing the transaction aids in ensuring transparency and prevents any last-minute surprises at closing.

In contrast, other options pertain to different stages of a real estate transaction or unrelated functions. The initial offer to purchase is documented in a purchase agreement and occurs prior to closing. Property tax assessments involve valuing the property for tax purposes and are not related to the closing process. Estimates for renovation costs are separate considerations and do not directly pertain to the closing disclosure.