What documents must lenders provide to borrowers at closing?

Lenders are required to provide a Closing Disclosure form to borrowers at the closing of a mortgage transaction. This document is essential as it outlines the final terms of the loan, including the interest rate, monthly payments, and all closing costs associated with the transaction. The Closing Disclosure is designed to ensure transparency and allow the borrower to understand their financial obligations clearly before signing any final agreements.

This form must be provided to borrowers at least three days before the closing to give them adequate time to review and ask any questions regarding the financial aspects of their loan. It plays a critical role in consumer protection by ensuring that borrowers are well-informed about the actual costs involved in their mortgage agreement compared to the Loan Estimate they received initially.

The other options do not meet the comprehensive requirements set by regulations in terms of what borrowers should receive at closing. For instance, while a Loan Agreement or purchase contract may be part of the paperwork involved, they do not provide the detailed financial breakdown and clear disclosure that the Closing Disclosure ensures. Identification documents are typically not part of the closing document set but are more related to the verification of identity rather than the specific details about the mortgage transaction itself. Thus, the Closing Disclosure is the key document that needs to be provided at closing to protect the borrower