Chapter 21- Flashcards

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Closing

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An event where promises made in a sales contract are fulfilled and mortgage loan funds (if any) are distributed to the buyer. It involves fulfilling the sales contract promises and distributing mortgage funds.

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Final Property Inspection

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The buyer reserves the right to make a final inspection, often called a walk-through, shortly before closing. It ensures necessary repairs are made, the property is well maintained, and no unauthorized changes have occurred.

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Title Procedures

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Buyers and lenders require the seller's title to comply with the real estate contract terms. The seller must produce a current abstract of title or title commitment, which the purchaser's attorney examines.

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Conducting the Closing

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Known by many names, such as settlement and transfer or passing papers. The main concerns are that the buyer receives a marketable title and the seller receives the purchase price.

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Face-to-Face Closing

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May be held at various locations, including the title company or lending institution. Attendees include the buyer, seller, real estate sales person, brokers, and possibly attorneys or representatives of lending institutions.

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Real Estate Settlement Procedures Act (RESPA)

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Requires disclosures to consumers about mortgage loan settlements and prohibits kickbacks and referral fees. Applies to first-lien residential mortgage loans for one- to four-family homes.

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Affiliated Business Arrangement (AfBA)

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A package of business arrangements between real estate brokerage firms and affiliated mortgage companies. Requires consumer awareness of other lenders' availability and cost, streamlining the settlement process.

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TILA-RESPA Integrated Disclosure (TRID) Rules

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Intended to help borrowers understand loan and settlement costs. The loan estimate worksheet resembles the final paperwork, aiding in price review.

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Loan Estimate (LE)

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A three-page form received after applying for a mortgage, detailing loan costs like interest rate and insurance. Must be delivered within three business days after application.

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Closing Costs

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Costs required to complete a mortgage loan, including origination fee, appraisal costs, title insurance, taxes, and more. Consumers can shop around to save money.