On a mortgage finance transaction, what is the first document that must be reviewed with the borrower?

The first document that must be reviewed with the borrower during a mortgage finance transaction is the Closing Disclosure. This document provides critical information about the loan terms, including the interest rate, monthly payment amount, and the total closing costs. It also outlines the amount of cash the borrower needs to bring to the closing table and breaks down various charges in detail.

Reviewing the Closing Disclosure at the beginning is essential because it ensures that the borrower fully understands the financial implications of the mortgage, including the final terms of the loan as they relate to affordability and total cost. This review is also mandated by the Consumer Financial Protection Bureau (CFPB) regulations, which require that borrowers receive this document at least three business days before closing to allow them to review all terms and costs associated with the mortgage.

By addressing this document first, the borrower can clarify any concerns or questions they may have before committing to the loan, which is a vital part of the financing process. This emphasis on transparency and understanding helps protect consumers and promotes informed decision-making.