Font size
WorksheetsReal Estate Closing Process 14
Total questions: 68
Worksheet time: 45mins
Who are some of the new players that come on the scene during the closing period?
Governor
Broker
Appraiser, attorneys, inspectors, loan officers, insurance agents.
Buyer
Fill in the blank: The conclusion of the real estate sales transaction is the _______.
closing
inspection
appraisal
listing
What are the two major events involved in closing a real estate transaction?
The deed from the seller to the buyer transfers title to the property.
Survey
Final inspection.
Purchase price is paid to the seller.
What must the buyer and the buyer's lender ensure about the title before closing?
The title is clear of any liens or encumbrances.
The title is in the seller's name.
The title is registered with the local government.
The title is insured by a third party.
The purpose of the attorney's opinion of title in a real estate transaction is to:
Discloses all liens, encumbrances, easements, conditions, and restrictions on the property.
Determine the market value of the property
Negotiate the terms of the sale
Inspect the physical condition of the property
What does a thorough inspection of the property by a professional home inspector help to identify?
Structural issues
Weather conditions
Furniture style
Garden layout
In the real estate contract, what right does the buyer usually reserve before the closing takes place?
Survey.
Final inspection
Loan
Title insurance.
What is transferred during the closing of a real estate transaction?
Ownership of the property. Title
Walk through.
The survey.
Title evidence.
A survey provides information about what aspect in a real estate transaction?
Property boundaries
Market trends
Legal disputes
Legal description
Location and size.
Which of the following is typically indicated by a survey?
Location of all buildings
Cost of the property
Legal description of the property
Mortgage details
The document that provides the exact amount required to pay off an existing loan in a real estate transaction is called:
Deed of Trust
Promissory Note
Payoff Statement
Mortgage Agreement
An affidavit of title assures the title insurance company that no defects have occurred since the date of the title examination.
True
False
The role of real estate professionals in preclosing arrangements is to:
negotiate final terms and conditions.
conduct the final property inspection.
prepare and review necessary documents.
arrange for property insurance.
The main interest of the seller in a real estate transaction is:
maximizing profit
ensuring buyer satisfaction
Receive payment for the property
maintaining property value
In areas where real estate sales transactions are closed through an escrow, what do the escrow instructions usually provide for?
The terms and conditions of the sale
The buyer's financial history
The local property tax rates
The neighborhood crime statistics
A face-to-face closing in real estate is:
a virtual meeting to finalize a real estate transaction.
an in-person meeting to finalize a real estate transaction.
a phone call to finalize a real estate transaction.
an email exchange to finalize a real estate transaction.
True or False: Real estate professionals always conduct closing proceedings.
True
False
What must a buyer provide along with a receipt for the premium?
Proof of identity
Proof of address
Proof of purchase
Proof of age
What are the affected properties that must be reported to the IRS on Form 1099-S?
Lnd including air space.
High rise building
Low rise buildings
And inherently permanent structure. Residential, commercial, or industrial
Shares in a cooperative housing corporation. A condominium unit and its appurtenant fixtures and common elements.
What is the closing process referred to in certain federal regulations?
Consummation
Termination
Completion
Conclusion
Who may attend a face-to-face closing?
Only the buyer
Only the seller
Both the buyer and the seller
Neither the buyer nor the seller
The closing agent in a real estate transaction is responsible for:
Preparing legal documents and ensuring all terms of the sale are met.
Finding a buyer for the property.
Inspecting the property for any damages.
Setting the selling price of the property.
List the items the seller deposits in an escrow procedure.
items the seller deposits in an escrow procedure
items the buyer deposits in an escrow procedure
items the seller receives after escrow
items unrelated to escrow
List the items the buyer deposits in an escrow procedure.
the items the buyer deposits in an escrow procedure
the items the seller deposits in an escrow procedure
the items the agent deposits in an escrow procedure
the items the bank deposits in an escrow procedure
The main purpose of the Real Estate Settlement Procedures Act (RESPA) is to:
protect consumers by regulating real estate settlement processes
provide tax benefits to real estate investors
encourage foreign investment in real estate
control housing prices in urban areas
In the exchange process, what must happen before the buyer receives the deed?
The buyer must sign the contract.
The seller must vacate the property.
The payment must be completed.
The deed must be notarized.
Which of the following loans does RESPA not apply to?
Loans on large properties (more than 25 acres)
Loans for a one-to-four family home
Loans for business or agricultural purposes
Construction loans or other temporary financing
A mortgage servicing transfer statement is required when:
the borrower defaults on the loan.
the servicing of a mortgage loan is transferred to a new servicer.
the interest rate on the mortgage changes.
the borrower requests a loan modification.
True or False: RESPA prohibits practices that increase the cost of settlement services.
True
False
Section 8 of RESPA prohibits:
kickbacks and unearned fees
discrimination in lending
predatory lending practices
false advertising
What does Section 9 prohibit the home seller from requiring?
The home seller from requiring a buyer to use a specific title insurance company
The home seller from requiring a buyer to pay for home inspection
The home seller from requiring a buyer to use a specific real estate agent
The home seller from requiring a buyer to pay for closing costs
An affiliated business arrangement (ABA) is:
A type of business partnership where two or more companies share resources.
A legal arrangement where a real estate broker or agent has an interest in a business that provides settlement services.
A merger between two companies in the same industry.
A contract between a company and its suppliers.
Which of the following is NOT required for an affiliated business arrangement (ABA)?
A) Participation is required
B) Other providers are available
C) The only thing of value received is a return on the ownership interest
What does RESPA prohibit the lender from requiring the borrower to deposit funds for?
Property taxes and insurance
Loan origination fees
Title insurance
Home inspection fees
The TILA-RESPA Integrated Disclosure Rule replaces which of the following?
Good Faith Estimate and HUD-1
Truth in Lending Act and Real Estate Settlement Procedures Act
Mortgage Disclosure Improvement Act
Home Ownership and Equity Protection Act
The new forms for the TILA-RESPA Integrated Disclosure Rule became effective on:
October 3, 2015
January 1, 2016
July 1, 2015
December 31, 2015
The purpose of the Loan Estimate form is to:
provide a detailed breakdown of the loan terms and costs.
offer a final approval for the loan application.
serve as a contract between the lender and borrower.
act as a receipt for the loan payment.
Which of the following fees may not increase before closing?
No tolerance fees
10% tolerance fees
Unlimited tolerance fees
The lender is responsible for which of the following according to the Loan Estimate form?
Providing the borrower with a detailed breakdown of loan costs
Ensuring the borrower has homeowner's insurance
Guaranteeing the lowest interest rate
Approving the loan application
The Closing Disclosure form itemizes:
loan terms, projected monthly payments, and closing costs
only the loan terms
only the projected monthly payments
only the closing costs
The Closing Disclosure form replaced which documents?
HUD-1 Settlement Statement and Truth-in-Lending Disclosure
Good Faith Estimate and Loan Estimate
Mortgage Servicing Disclosure Statement and Affiliated Business Arrangement Disclosure
Initial Escrow Account Disclosure Statement and Servicing Transfer Statement
What triggers a new three-day waiting period according to the Closing Disclosure form?
A change in the loan product
A decrease in the APR by more than 1/8 of a percent
A prepayment penalty is added
All of the above
Who developed the information booklet called Your Home Loan Toolkit?
Consumer Financial Protection Bureau
Federal Reserve
Department of Housing and Urban Development
Federal Trade Commission
What does RESPA prohibit in any real estate settlement service?
Payment of kickbacks or unearned fees
Payment of earned fees
Payment of taxes
Payment of insurance
The intent of the Mortgage Disclosure Improvement Act (MDIA) is to:
Ensure that consumers receive timely and accurate information about their mortgage loans.
Provide tax benefits to homeowners.
Reduce the interest rates on mortgage loans.
Encourage banks to offer more mortgage loans.
According to the MDIA, what must a lender provide if the APR increases more than 0.125% from that stated in the Closing Disclosure?
A revised Closing Disclosure
A new loan estimate
A refund to the borrower
An interest rate reduction
What is a debit in the context of a closing statement?
What is a credit in the context of a closing statement?
In the table 'FIGURE 14.4: Credits and Debits', which item is a credit to the buyer and a debit to the seller?
Fill in the blank: The responsibility for paying a real estate broker's commission is normally determined by ________.
the listing agreement
the buyer's agreement
the seller's discretion
state law
In the state of Michigan, what is the state real estate transfer tax rate per $500 of the property's sales price?
$3.75
$4.00
$4.25
$4.50
Calculate the total transfer tax for a property in a low-population county with a sales price of 150,000.Usethefollowingrates:statetransfertaxis 3.75 per 500,andcountytransfertaxis 0.55 per $500.
The total transfer tax can be calculated by first determining the number of $500 increments in the sales price of $150,000. There are 300 increments of $500 in $150,000 (150,000 / 500 = 300). The state transfer tax would be 300 increments * $3.75 = $1,125. The county transfer tax would be 300 increments * $0.55 = $165. Therefore, the total transfer tax is $1,125 + $165 = $1,290.
The total transfer tax is $1,500, calculated by adding the state transfer tax of $1,200 and the county transfer tax of $300.
The total transfer tax is $1,050, calculated by adding the state transfer tax of $900 and the county transfer tax of $150.
The total transfer tax is $1,350, calculated by adding the state transfer tax of $1,050 and the county transfer tax of $300.
Who generally pays the appraisal fee in a real estate transaction?
Fill in the blank: If a conventional loan carries private mortgage insurance (PMI), the buyer pre-pays ______ at closing.
PMI premium
loan origination fee
property tax
homeowner's insurance
In most states, the seller owns the property on the day of closing, and prorations or apportionments are usually made up to and including the day of closing. True or False?
True
False
How many days are usually used in a year for computing mortgage interest, general real estate taxes, and other expenses?
Usually, 360 days are used in a year for computing mortgage interest, general real estate taxes, and other expenses.
Usually, 365 days are used in a year for computing mortgage interest, general real estate taxes, and other expenses.
Usually, 350 days are used in a year for computing mortgage interest, general real estate taxes, and other expenses.
Usually, 355 days are used in a year for computing mortgage interest, general real estate taxes, and other expenses.
On almost every mortgage loan, the interest is paid in _______.
installments
lump sum
advance
arrears
Special assessments for municipal improvements are usually paid in annual installments over several years.
True
False
Who customarily receives the rents for the day of closing and pays all expenses for that day?
The buyer
The seller
The real estate agent
The lender
How is the yearly charge divided to determine a daily charge in the 365-day method?
By dividing the yearly charge by 365
By dividing the yearly charge by 12 and then by 30
By dividing the yearly charge by 360
By dividing the yearly charge by 52
The process of calculating prorated real estate tax using a 360-day year involves:
Dividing the annual tax by 360 and multiplying by the number of days the property is owned.
Dividing the annual tax by 365 and multiplying by the number of days the property is owned.
Calculating the monthly tax and multiplying by the number of months the property is owned.
Using the actual number of days in the year to calculate the daily tax rate.
Fill in the blank: Interim interest is charged by a lender when a borrower obtains a new loan. This interest is called ______ because it is for the interim period of time from the day of closing through the end of the closing month.
Interim interest
Closing interest
Monthly interest
Accrued interest
Calculate the prorated real estate tax for a property with an annual tax of $3,600, if the sale is closed on September 17 using a 365-day year. Show your work.
$1,050
$2,550
$3,600
$1,200
A borrower is closing on a $114,300 loan with an interest rate of 4.75% on November 18. How much interim interest will be due at closing? The first full payment is due January 1. Calculate the interim interest due at closing.
$225.00
$250.00
$275.00
$300.00
In the context of prepaid items, if the prepaid period is three months and 13 days, with three months at 300permonthand13daysat 10 per day, what is the total proration credited to the seller and debited to the buyer?
$930
$940
$950
$960
Explain how the prepaid time for the water bill is computed when the sale is to close on August 3. Include the calculation for one day's cost.
The prepaid time is calculated by dividing the total bill by the number of days in the billing cycle and then multiplying by the number of days from the start of the billing cycle to August 3.
The prepaid time is calculated by taking the total bill amount and dividing it by the number of days from the start of the billing cycle to August 3.
The prepaid time is calculated by multiplying the total bill by the number of days from the start of the billing cycle to August 3 and then dividing by the number of days in the billing cycle.
The prepaid time is calculated by taking the total bill amount and multiplying it by the number of days in the billing cycle.
Fill in the blank: To compute one day's cost, divide $80 by 30, which equals ______ per day.
$2.67
$2.50
$3.00
$2.75
What is the total prepaid amount credited to the seller and debited to the buyer on the closing statement?
$5,000
$10,000
$15,000
$20,000
