What is "closing disclosure"?

A closing disclosure is a critical document in real estate transactions, specifically related to mortgage loans. It provides a comprehensive summary of the final terms and costs associated with the buyer's mortgage. This includes details such as the loan amount, interest rate, monthly payments, and the complete itemization of closing costs, which help both buyers and sellers understand the financial implications of the transaction before it is finalized.

The importance of the closing disclosure lies in its role during the closing process, ensuring that buyers have a clear and detailed understanding of their financial commitments and any associated fees. It helps to prevent any confusion or surprises at the closing table, reinforcing transparency in the financing process.

The other options do not accurately depict the function of a closing disclosure. For example, a summary of buyers' financial history is a different type of document related to creditworthiness, while preliminary estimates of property taxes and agreements between buyers and sellers refer to other aspects of a real estate transaction and not specifically the closing disclosure itself.