Closing and Settlement Flashcards
7 cards from real Mortgage practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Closing and Settlement flashcards as text
What is the primary purpose of a final walk-through before closing?
Answer: To verify the property's condition and confirm that any agreed-upon repairs have been completed
The final walk-through allows the buyer to confirm the property is in the agreed-upon condition, that repairs were made, and that the seller has vacated and left agreed-upon items.
What does 'proration' mean in the context of a real estate closing?
Answer: The fair division of ongoing property expenses such as taxes and HOA dues between buyer and seller based on the closing date
Proration ensures that recurring costs like property taxes, HOA fees, and utility payments are fairly split between buyer and seller based on their respective ownership periods.
Which party typically pays for the lender's title insurance policy?
Answer: The borrower/buyer, as it is required by the lender to protect the lender's interest
The borrower pays for the lender's title insurance (also called a loan policy), which protects the lender's interest in the property up to the loan amount.
What is the VA funding fee charged at closing on VA loans?
Answer: A one-time fee paid to the Department of Veterans Affairs in lieu of monthly mortgage insurance premiums
The VA funding fee is a one-time charge paid at closing that helps sustain the VA loan program; it replaces monthly mortgage insurance and varies based on loan type and down payment.
What does 'disbursement' refer to at the mortgage closing?
Answer: The distribution of loan proceeds and other collected funds to appropriate parties such as the seller, payoff lenders, and service providers
Disbursement is the actual release and distribution of funds at closing — the lender wires the loan amount, which the settlement agent then pays to the seller, pays off existing liens, and distributes closing costs.
What is a recording fee paid at closing?
Answer: A government fee paid to the local county or municipal recorder to officially enter the deed and mortgage into public records
Recording fees are paid to the local government office (county clerk or recorder) to officially record the deed and deed of trust/mortgage, establishing the public record of ownership and the lien.
Under TRID, which of the following changes would trigger a new 3-business-day waiting period before closing can occur?
Answer: An increase in the APR beyond the tolerance threshold, a change in the loan product, or the addition of a prepayment penalty
TRID specifies three triggering events that require a new 3-business-day waiting period: APR increases above tolerance, a loan product change, or the addition of a prepayment penalty to the loan.