Process 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 Process flashcards as text
What is 'cash to close' and what does it typically include?
Answer: The total funds the buyer must bring to closing, including down payment, closing costs, and prepaid items minus any credits
Cash to close is the total out-of-pocket amount required from the buyer at settlement, encompassing the down payment, closing costs, prepaid expenses, and any adjustments.
What is the purpose of an escrow impound account in a mortgage?
Answer: To collect and pay property taxes and insurance on behalf of the borrower
An escrow impound account collects a portion of property taxes and insurance premiums monthly so the lender can pay these bills when due, protecting the collateral.
When must a lender return a borrower's appraisal report?
Answer: At least three business days before closing
Under the Equal Credit Opportunity Act, lenders must provide applicants a copy of the appraisal promptly and no later than three business days before closing.
What is a 'funding condition' in the final stages of the mortgage process?
Answer: A last-minute lender requirement that must be satisfied before loan funds are disbursed
Funding conditions are final items—such as signed closing documents, proof of insurance, or updated verification—that must be cleared before the lender releases loan funds.
What is the 'right of rescission' and which mortgage type does it apply to?
Answer: A three-business-day right to cancel that applies to refinances of primary residences
Under TILA, borrowers refinancing their primary residence have three business days to rescind the transaction without penalty; this right does not apply to purchase loans.
What does 'wet settlement' mean compared to 'dry settlement' in a mortgage closing?
Answer: Wet = loan funds are disbursed the same day as closing; Dry = funds are disbursed after a review period
In a wet settlement, all documents are signed and funds disbursed on the same day; in a dry settlement, disbursement is delayed until documents are reviewed and recorded.
What is 'mortgage servicing' and when does it begin?
Answer: The administration of the loan (collecting payments, managing escrow) after the loan closes and funds
Mortgage servicing involves all post-closing loan management activities—collecting payments, handling escrow, and managing delinquencies—often performed by a company different from the originating lender.