What is the purpose of the Closing Disclosure?

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The Closing Disclosure serves a crucial purpose by summarizing the actual charges and adjustments for the borrower, which is instrumental in ensuring transparency and understanding of the financial aspects of a real estate transaction. This document details the final terms of the loan, including the loan amount, interest rate, monthly payment, and how much the borrower will pay in closing costs. It also includes a breakdown of the funds required at closing, allowing the buyer to see a clear picture of their financial obligations prior to completing the transaction.

Providing this comprehensive summary helps borrowers understand their obligations, prepare for the financial impact of the purchase, and ensures they are aware of any discrepancies from the initial estimate they received, often known as the Loan Estimate. This clarity is essential to prevent misunderstandings and disputes during the closing process.

The other options mentioned do not align with the core functions of the Closing Disclosure. Outlining the closing date, providing property value analysis, or notifying buyers of repairs are not its primary objectives. The focus remains on financial disclosure and accuracy regarding costs associated with the transaction.

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