In real estate, what is the purpose of a closing disclosure?

The purpose of a closing disclosure is to summarize transaction costs associated with a real estate purchase. This document is a critical component of the closing process and provides both the buyer and the seller with a comprehensive summary of the final costs they can expect to incur during the transaction.

The closing disclosure includes detailed information such as loan terms, monthly mortgage payments, and the total closing costs, which encompass various fees like origination charges, title insurance, and other expenditures related to the transaction. It ensures that all parties involved are clear about the financial aspects of the deal before signing the final paperwork.

This transparency is important for facilitating informed decision-making and preventing any surprises at the closing table. By offering a clear breakdown of costs, the closing disclosure plays a vital role in ensuring both buyers and sellers understand their financial obligations and the financial implications of the transaction overall.