What document must borrowers receive before closing on a loan?

The Closing Disclosure document is a critical component of the mortgage process that borrowers must receive prior to closing on a loan. This document provides detailed information about the loan terms, including the loan amount, the interest rate, monthly payment costs, and any additional fees or closing costs associated with the transaction.

The purpose of the Closing Disclosure is to ensure that borrowers have a complete and clear understanding of their mortgage obligations before they finalize the loan. It is designed to be received at least three business days before closing, allowing borrowers time to review the terms and ask questions if needed, fostering transparency and informed decision-making.

In contrast, the other options serve different purposes in the mortgage process. The Loan Summary Report, while helpful, may not contain the comprehensive details required by law under the Truth in Lending Act and the Real Estate Settlement Procedures Act. The Pre-approval Letter indicates a lender's willingness to lend based on preliminary information but is not a binding document outlining loan terms. The Final Loan Agreement is often presented at closing but does not serve the same purpose as the Closing Disclosure, which must be provided beforehand for compliance and consumer protection purposes.