Washington State Real Estate Practice Exam

What is included in a "closing disclosure" during a real estate transaction?

1. A summary of the property's history

2. Detailed loan terms and property taxes

3. A document that outlines all final terms, costs, and fees for a real estate transaction

4. The initial sales agreement

The correct answer is: A document that outlines all final terms, costs, and fees for a real estate transaction

The choice reflecting the correct answer emphasizes that a "closing disclosure" is a crucial document in a real estate transaction. It serves to transparently outline all final terms, costs, and fees associated with the transaction, allowing all parties involved to understand their financial obligations clearly before closing. This document must provide comprehensive details, including loan terms, interest rates, monthly payments, and all closing costs such as title insurance, recording fees, and more. The inclusion of these details is governed by federal law, ensuring that buyers are well-informed. This transparency helps buyers understand the total amount they will need to pay at closing and the long-term financial implications of the mortgage. As such, it plays a vital role in protecting consumers and promoting informed decision-making. While summaries of the property's history, specific loan terms, and initial agreements have their own relevance in the home-buying process, they do not encompass the all-encompassing nature of what the closing disclosure provides. Thus, the distinct function of the closing disclosure is why it is correctly identified as the document that details all final terms, costs, and fees.