Mortgage Closing and Settlement

Question 1

Which document provides borrowers with their final loan terms and closing costs at least 3 business days before consummation?

Accepted Answer

Closing Disclosure

Answer

The Closing Disclosure, required under TRID, must be provided at least 3 business days before consummation so borrowers can review final terms.

Question 2

What is the right of rescission in a mortgage transaction?

Accepted Answer

The borrower's right to cancel certain refinance transactions within 3 business days of consummation

Answer

The right of rescission under TILA gives borrowers 3 business days after consummation to cancel certain non-purchase mortgage transactions, such as refinances.

Question 3

Who typically conducts the closing of a real estate transaction?

Accepted Answer

An escrow officer, title company representative, or attorney

Answer

Closings are typically conducted by a neutral third party such as an escrow officer, title company, or attorney, depending on state law and local custom.

Question 4

What is a 'dry closing'?

Accepted Answer

A closing where documents are signed but funds are not disbursed at the time of signing

Answer

In a dry closing, all documents are signed but the actual disbursement of funds is delayed until certain conditions are met, common in some western states.

Question 5

What does 'cash to close' represent on the Closing Disclosure?

Accepted Answer

The total amount the borrower must bring to the closing table to complete the transaction

Answer

Cash to close is the total funds the borrower needs to bring to closing, including the down payment, closing costs, minus any credits or deposits already paid.

Mortgage Practice Test

Mortgage Practice Test

Mortgage Closing and Settlement