When is a closing disclosure given to the borrower?

The correct timeframe for providing the closing disclosure is at least three days before closing. This regulation is part of the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA), which aim to provide consumers with clear and transparent information about their mortgage loan terms and costs. The three-day requirement allows borrowers sufficient time to review the terms and costs of the loan, compare them with their Loan Estimate, and ask any questions prior to closing.

This period not only reinforces informed decision-making but also helps to prevent last-minute surprises or misunderstandings about the financial obligations the borrower is agreeing to. By ensuring that the closing disclosure is delivered in advance, it allows borrowers to take any necessary actions if they notice discrepancies or if they want to reconsider the details of the loan agreement.

Other options do not align with regulatory requirements. Providing the closing disclosure immediately after loan application completion or whenever the lender sees fit would not give borrowers the necessary time to evaluate their loan terms. Additionally, delivery of the disclosure after loan approval would not fulfill the purpose of the three-day review period mandated by law.