What is the role of the closing disclosure in the mortgage process?

The closing disclosure plays a crucial role in the mortgage process as it provides a detailed outline of the final terms and total costs associated with the loan. This document is typically provided to borrowers at least three business days before closing, allowing them to review and understand the specific financial obligations they are committing to under the mortgage agreement.

The closing disclosure includes key information such as the loan amount, interest rate, monthly payments, and a breakdown of closing costs. It ensures that borrowers are fully informed about what to expect financially and helps them identify any discrepancies between the initial loan estimate and the final figures presented before closing. This transparency is designed to protect consumers and prevent any surprises at the time of closing, making it an essential component of the mortgage lending process.

Other options relate to different functions or aspects of the mortgage process that are not specifically covered by the closing disclosure. For instance, summarizing loan market trends or informing the lender's decision on the application are not the function of the closing disclosure. Comparing rates from different lenders pertains more to the initial stages of mortgage shopping rather than the closing phase, reinforcing that the primary purpose of the closing disclosure is to clarify the final terms and costs of the loan for the borrower.