Mortgage Closing and Settlement 2

Question 1

What is an escrow account in the context of a mortgage loan?

Accepted Answer

An account held by the lender or servicer to collect and pay property taxes and insurance on behalf of the borrower

Answer

An account where the down payment is held awaiting underwriting approval

Answer

A special government savings account for first-time homebuyers

Answer

An account used to hold the lender's origination fee until after closing

Question 2

The HUD-1 Settlement Statement was replaced by which document under the TRID rule?

Accepted Answer

Closing Disclosure

Answer

Loan Estimate

Answer

Good Faith Estimate

Answer

Truth in Lending Disclosure

Question 3

What does 'settlement' mean in the context of a real estate transaction?

Accepted Answer

The process where property ownership is officially transferred, funds are disbursed, and all parties receive what they are owed

Answer

A compromise agreement between lender and borrower about the interest rate

Answer

A negotiation between buyer and seller to reduce the purchase price

Answer

The final appraisal confirming the property value

Question 4

Which of the following costs is typically NOT paid by the borrower at closing?

Accepted Answer

The seller's real estate commission

Answer

Loan origination fees

Answer

Prepaid homeowner's insurance

Answer

Title search fee

Question 5

What is a seller concession (seller credit) at closing?

Accepted Answer

An amount the seller agrees to contribute toward the buyer's closing costs, reducing cash needed at closing

Answer

Money the seller receives back as a rebate from the title company

Answer

A discount on the purchase price granted by the seller after inspection

Answer

A fee the seller pays to the lender for underwriting the loan

Question 6

How is prepaid interest at closing calculated?

Accepted Answer

By calculating the per diem interest rate and multiplying by the number of days from closing through the end of the month

Answer

By charging one full month of interest as the first payment

Answer

By applying the APR to the loan amount for a 30-day period

Answer

By adding three months of interest to the down payment

Question 7

What is a 'no-closing-cost' mortgage?

Accepted Answer

A loan where closing costs are either rolled into the loan balance or offset by the lender through a higher interest rate

Answer

A government program that eliminates all fees for eligible first-time homebuyers

Answer

A mortgage where the lender waives all fees as a promotional offer

Answer

A loan that only requires the down payment with no additional fees ever