What is the purpose of the Closing Disclosure (CD)?

• A. To inform the borrower of final closing costs and loan terms.
• B. To request a new appraisal.
• C. To extend the closing date.
• D. To deny the loan.

Answer: (A)

The Closing Disclosure’s purpose is to inform the borrower of final closing costs and loan terms. It lays out the exact loan amount, interest rate, monthly payment, and the total costs to close, including a detailed, line-by-line breakdown of origination charges, points, credits, third-party fees, and any prepaids or escrow items. It also shows the estimated cash the borrower must bring to closing.

This document is provided three business days before closing so the borrower can compare the final numbers with what was disclosed on the Loan Estimate and ask questions if anything doesn’t match. If the final figures change, a new Closing Disclosure must be issued with another waiting period.

Other actions—like requesting a new appraisal, extending the closing date, or denying the loan—are separate processes and not the purpose of the Closing Disclosure itself.