CHCP CHCP Closing Costs & Fee Structures 2 — Questions and Answers
Question 1: On the Closing Disclosure, the cash to close amount reflects:
- Only the down payment
- Total closing costs minus lender credits plus down payment adjustments (Correct answer)
- The loan amount minus purchase price
- Recording fees only
Correct answer: Total closing costs minus lender credits plus down payment adjustments
Cash to close is calculated as the total closing costs plus the down payment, minus any lender credits, seller concessions, and deposits already paid.
Question 2: Which fee is typically collected by the title company or closing agent for conducting the settlement and is listed on the Closing Disclosure?
- Escrow/settlement fee (Correct answer)
- Hazard insurance premium
- Transfer tax
- HOA transfer fee
Correct answer: Escrow/settlement fee
The escrow or settlement fee compensates the closing agent for coordinating the settlement, handling documents, and disbursing funds.
Question 3: How many business days before consummation must a borrower receive the Closing Disclosure under TRID rules?
- One business day
- Two business days
- Three business days (Correct answer)
- Five business days
Correct answer: Three business days
TRID requires that the borrower receive the Closing Disclosure at least three business days before loan consummation to allow time for review.
Question 4: Which closing cost category on the Closing Disclosure includes flood determination fees, pest inspection fees, and survey fees?
- Section A – Origination Charges
- Section B – Services You Cannot Shop For
- Section C – Services You Can Shop For (Correct answer)
- Section H – Other
Correct answer: Section C – Services You Can Shop For
Section C of the Loan Costs table lists required third-party services the borrower may shop for, such as pest inspections, surveys, and title services from providers not on the lender's list.
Question 5: A seller credit at closing is applied to which section of the Closing Disclosure?
- Loan Costs
- Prepaids
- Summaries of Transactions – Seller Credits column (Correct answer)
- Recording Charges
Correct answer: Summaries of Transactions – Seller Credits column
Seller credits reduce the buyer's costs and are recorded in the Summaries of Transactions section on the buyer's side as a credit and on the seller's side as a debit.
Question 6: Which of the following closing costs is subject to the 10% aggregate tolerance rule under TRID?
- Lender origination charge
- Government recording fees
- Flood determination fee from a lender-required provider (Correct answer)
- Pest inspection fee when borrower chooses own provider
Correct answer: Flood determination fee from a lender-required provider
Recording fees and third-party fees for services from lender-required providers fall under the 10% aggregate tolerance, meaning the total cannot increase by more than 10% from the Loan Estimate.
CHCP CHCP Closing Costs & Fee Structures 2
On the Closing Disclosure, the cash to close amount reflects: