What form is used to disclose closing costs to a borrower?

The correct form used to disclose closing costs to a borrower is the Closing Disclosure form. This document is required under the Truth in Lending Act and is designed to provide borrowers with clear, concise details about all costs associated with their mortgage.

The Closing Disclosure is delivered to the borrower at least three days before the closing of the loan, allowing them time to review the terms and costs associated with the loan. It includes information such as the loan amount, interest rate, monthly payments, and all closing costs which are outlined in a detailed manner.

In contrast, the Loan Estimate form is provided earlier in the loan process, typically within three business days after a borrower applies for a loan. It gives an estimate of the closing costs and other loan details but is not the final disclosure document used for the actual closing. The Purchase Agreement form is a contract between the buyer and seller of a property, and the Mortgage Application form is filled out by a borrower when applying for a mortgage, but neither pertains directly to the disclosure of closing costs at the closing stage.