CHCP Settlement Statement Preparation 2

Question 1

On a Closing Disclosure, which section lists the loan terms including loan amount, interest rate, and whether the rate can rise?

Accepted Answer

Loan Terms table

Answer

The Loan Terms table at the top of Page 1 of the Closing Disclosure summarizes the loan amount, interest rate, and whether those figures can increase.

Question 2

A seller credit of $3,000 toward closing costs is entered on the Closing Disclosure as:

Accepted Answer

A debit to the seller and a credit to the buyer

Answer

A seller concession reduces the seller's net proceeds (debit to seller) and reduces the buyer's cash due at closing (credit to buyer).

Question 3

Which document replaced both the HUD-1 Settlement Statement and the Good Faith Estimate for most residential mortgage transactions after October 3, 2015?

Accepted Answer

Closing Disclosure (CD)

Answer

The TRID rule (Know Before You Owe) replaced the HUD-1 and GFE with the Loan Estimate and Closing Disclosure for covered mortgage transactions.

Question 4

Hazard insurance premium paid at closing by the buyer for the first full year is classified as:

Accepted Answer

A recurring prepaid item

Answer

The first-year homeowner's insurance premium paid at closing is a recurring prepaid item because the cost recurs annually.

Question 5

On the ALTA Settlement Statement, Column A represents:

Accepted Answer

Buyer debits and credits

Answer

The ALTA Settlement Statement uses Column A for the buyer's side and Column B for the seller's side of each transaction entry.

(CHCP) Certified Home Closing Professional Practice Test

(CHCP) Certified Home Closing Professional Practice Test

CHCP Settlement Statement Preparation 2