Real Estate Transaction Closing Process Review

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Questions and Answers

Match the following terms with their definitions:

Debit = A charge that must be paid by the buyer or the seller at closing Credit = The amount entered in favor of the buyer or the seller Proration = Dividing certain charges between the buyer and the seller Servicing rights = Rights to service a loan which can be sold or assigned

Match the following documents with their purpose:

Loan Estimate = Provided to borrowers with an estimate of loan terms and closing costs Closing Disclosure = Details the final loan terms and closing costs for borrowers Mortgage servicing transfer statement = Notification from lender if servicing rights are being sold or assigned Closing statement = An account of amounts paid or received by parties involved in the transaction

Match the following methods of proration with their corresponding calculation basis:

360-day year = Yearly charge divided by 360 days 365-day year = Yearly charge divided by 365 days (366 in leap year) Actual number of days = Determined in proration period and multiplied by daily charge Date of closing = Proration done as of this date, with seller's responsibility

Match the following with their role in the closing process: Real Estate Settlement Procedures Act (RESPA)

Provides consumer protection in settlement process = Real Estate Settlement Procedures Act (RESPA) Signup and view all the answers

Match the following with their role in the closing process: Escrow holder (escrow agent)

Coordinates closing activities as a disinterested third party = Escrow holder (escrow agent) Signup and view all the answers

Match the following with their role in the closing process: Loan Estimate form

Must be provided to borrower within three business days of loan application = Loan Estimate form Signup and view all the answers

Match the following with their role in the closing process: Closing Disclosure form

Itemizes all charges to be paid during closing = Closing Disclosure form Signup and view all the answers

Match the following with their role in the closing process: Your Home Loan Toolkit

Must be provided by lender to every person submitting a loan application = Your Home Loan Toolkit Signup and view all the answers

Match the following with their applicability in transactions: RESPA

Does not apply to transactions solely financed by seller's mortgage or buyer's assumption of existing loan = RESPA Signup and view all the answers

Match the following with their applicability in transactions: Kickbacks and referral fees

Eliminated by RESPA to protect consumers = Kickbacks and referral fees Signup and view all the answers

Match the following with their applicability in transactions: Excessive escrow account deposits

Prohibited by RESPA = Excessive escrow account deposits Signup and view all the answers

Match the following with their role at closing meetings: Panics at escrow company, title company, lender's office, or attorney's office

May execute documents separately and never meet face-to-face = Panics at escrow company, title company, lender's office, or attorney's office Signup and view all the answers

Match the following with their purpose at closing: Closing Disclosure form

Itemizes all charges to be paid during closing = Closing Disclosure form Signup and view all the answers

Study Notes

Closing in real estate is the transfer of property ownership for the selling price, involving various documents and inspections.
The buyer needs the seller's deed, title evidence, survey, necessary inspections results, title affidavit, and evidence of fund availability for a successful transaction.
The seller requires the payoff statement from their lender, buyer's fund evidence, and a closing statement showing fund distribution.
The lender seeks assurance of lien rights priority and may require the buyer to obtain a mortgagee's title insurance policy.
The IRS may mandate Form 1099-S submission for income reporting, with the responsibility typically falling on closing agents or mortgage lenders.
The Real Estate Settlement Procedures Act (RESPA) protects consumers by ensuring accurate transaction cost information, eliminating kickbacks, and prohibiting certain practices by sellers and lenders.
Closing may occur in different settings depending on state laws, involving face-to-face meetings or separate document executions by the parties.

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Description

Review key points of the real estate closing process, including ownership transfer, required documents, inspections, and encumbrances removal. Understand the steps involved in completing a real estate transaction.