What is a "closing disclosure"?

A closing disclosure is a critical document provided to borrowers in the mortgage process that details the final terms of the loan and includes a comprehensive breakdown of all closing costs associated with the mortgage transaction. This document is designed to ensure that borrowers understand the financial obligations they are agreeing to before finalizing their loan.

The closing disclosure outlines important information such as the annual percentage rate (APR), the total amount financed, and a detailed itemization of closing costs which include fees for services such as appraisals, inspections, and title insurance. It typically must be provided to borrowers at least three business days before closing, allowing them time to review and ask questions about the terms.

The other options do not accurately reflect the role of the closing disclosure. While a report on the borrower's credit history is important for loan approval, it does not provide details regarding loan terms or costs. Similarly, a summary of all payments made during the loan pertains to payment history rather than closing costs or final terms. Lastly, a statement from the lender regarding future payments would not encompass the necessary information related to closing costs or final loan terms covered in a closing disclosure.