CHCP Real Estate Transactions & Documentation 3

Question 1

What is the purpose of a 'subordination agreement' in a real estate transaction?

Accepted Answer

It causes a junior lien to take a lower priority position behind a new senior lien

Answer

A subordination agreement allows a lien with higher priority to yield that priority to a new lien, commonly used when refinancing with an existing HELOC.

Question 2

Which document in a real estate closing outlines a borrower's personal promise to repay the mortgage loan?

Accepted Answer

Promissory note

Answer

The promissory note is the borrower's written, legally binding promise to repay the loan under specified terms.

Question 3

An 'as-is' clause in a purchase contract most directly means:

Accepted Answer

The buyer accepts the property in its current condition with no seller repairs

Answer

An as-is clause means the buyer accepts the property in its existing condition, and the seller is not obligated to make repairs.

Question 4

What is the primary function of the Closing Disclosure (CD) in a residential mortgage transaction?

Accepted Answer

To provide the final, itemized breakdown of all loan terms and closing costs

Answer

The Closing Disclosure provides the final loan terms, monthly payment, and all closing costs at least three business days before consummation.

Question 5

In a seller-financed transaction, what document serves as the security instrument giving the lender a lien on the property?

Accepted Answer

Mortgage or deed of trust

Answer

A mortgage or deed of trust is recorded against the property to create a lien that secures repayment of the promissory note.

(CHCP) Certified Home Closing Professional Practice Test

(CHCP) Certified Home Closing Professional Practice Test

CHCP Real Estate Transactions & Documentation 3