What is the purpose of the Closing Disclosure in mortgage transactions?

The purpose of the Closing Disclosure in mortgage transactions is to provide a detailed account of the transaction and associated costs. This document is a critical part of the mortgage process, as it outlines all the financial aspects of the loan, including loan terms, monthly payments, and the total closing costs that the borrower will need to pay at closing. Additionally, it provides an itemized list of all fees and charges associated with the loan, ensuring transparency and allowing the borrower to understand fully what they are responsible for financially.

By detailing the terms and costs involved, the Closing Disclosure ensures that borrowers can make informed decisions before finalizing their mortgage. This helps prevent any surprises at the closing table and reinforces the importance of clear communication between lenders and borrowers throughout the lending process.