Which document is crucial for ensuring transparency about closing costs in a real estate transaction?

The Closing Disclosure is a vital document in real estate transactions because it provides a detailed breakdown of all closing costs associated with the purchase of property. This document is required by law for most residential transactions and is designed to give buyers a clear understanding of what they will be paying at closing, ensuring transparency throughout the transaction process.

The Closing Disclosure outlines all loan terms, projected monthly payments, and any fees that must be paid at closing, such as those from third-party providers like title companies or appraisers. By providing this comprehensive summary, it allows buyers to compare this information with the Loan Estimate they received when applying for the mortgage, enabling them to identify any discrepancies or changes in costs.

Other documents, such as the Sales Agreement, serve different purposes, like outlining the terms of the sale between the buyer and seller, while the Home Inspection Report details the condition of the property, and the Title Search Report confirms ownership status and any liens on the property. Although all these documents are important in their own right, they do not specifically focus on the transparency of costs associated with closing, which is the primary role of the Closing Disclosure.