Texas Real Estate Sales Agent ExamFinancingMedium
A buyer is closing on a new home. The lender provides a document detailing all the costs associated with the loan, including the interest rate, monthly payment, and total closing costs, at least three business days before closing. What is this document called?
- ALoan Estimate
- BPromissory Note
- CTruth in Lending Disclosure
- DClosing Disclosure (CD)
Show answer & explanationAnswer & explanation
Correct answer: D. Closing Disclosure (CD)
The Closing Disclosure (CD) is the document provided by the lender at least three business days before closing, outlining all final loan terms, closing costs, and financial details of the transaction.
Why the other options are wrong
- A. The Loan Estimate is provided within three business days of loan application, not three days before closing.
- B. A Promissory Note is the borrower's promise to repay the loan, not a disclosure of closing costs.
- C. The Truth in Lending Disclosure (TIL) was replaced by the Loan Estimate and Closing Disclosure for most mortgage loans under TRID.
Closing Disclosure (CD)
A standardized five-page form that provides final details about the mortgage loan you have selected.
- Must be provided to the borrower at least three business days before closing.
- Details final loan terms, projected payments, and closing costs.
- Replaces the HUD-1 Settlement Statement and final Truth in Lending Disclosure.
Memory trick: Disclosures reveal the truth, first an estimate, then the final close.