TEXAS PRINCIPLES OF REAL ESTATE 2 CHAPTER 14
What is a debit?
A debit is money that the buyer or seller needs to pay at closing.
Loan Estimate Sample: Page 3
Comparisons Other Considerations Confirm Receipt
What does CLO stand for?
Computerized Loan Originations
The buyer has the right to review the Closing Disclosure form within how many business days before closing?
3
The buyer has the right to review the Loan Estimate form within how many days after the loan application
3
The Closing Disclosure document contains how many pages?
5
What is a credit?
A credit is money that the buyer or seller receives at closing, either because it was already paid or it's being reimbursed.
Loan Estimate Sample: Page 2
loan cost other cost
Prorated Settlement Charges
Any item that is prorated is shown on the settlement statement as a debit to one party and a credit to the other party for the same amount
RESPA
Effective October 1, 2015, the real estate industry has new requirements as specified in the TILA/RESPA Integrated Disclosure (TRID) Rule
The Closing Disclosure form replaced what forms?
HUD-1/Final TIL
buyers credits
KEY CONCEPT earnest money or deposit loan amount any pro-rations
What item would be a credit to the buyer on the settlement statement?
Loan amount
What does the abbreviation RESPA stand for?
Real Estate Settlement Procedures Act
RESPA covers loans on what type of transactions?
Residential involving a new first mortgage loan
What does the abbreviation TRID stand for?
TILA/RESPA Integrated Disclosure
Closing Disclosure
The Closing Disclosure form integrates and replaces the HUD-1 and the final TIL disclosure for these transactions
confirm receipt
This section has a place for the borrowers to sign. However, signing means only that the borrower has received a copy of the form. It does not mean that the borrower has accepted the loan.
What's the purpose of a buyer's escrow account when purchasing real estate?
To hold money for certain payments until they are paid out
TRID rule
a Closing Disclosure—a form designed to detail all financial particulars of a transaction—must be delivered to the borrower at least three business days before closing.
How does a prorated item appear on the settlement statement?
as a debt to one party and a credit to the other party for the same amount
Which one of these items would not be prorated on the day of closing (Property Taxes, Homeowner's Association fees, rents for investment property or Attorney fees)?
attorneys fees
sellers debts
broker's commission title fee, such as for clearing the title fee for preparing the deed attorney fee escrow fee loan balance
sellers credits
contract sales price items paid for in advance, such as taxes for the unused portion
Real Estate Settlement Procedures Act
created to ensure that the buyer and seller in a residential real estate transaction involving a new first mortgage loan have knowledge of all settlement costs. RESPA requires that the two parties receive the correct figures pertaining to their closing costs. The Act is administered by the Consumer Financial Protection Bureau (CFPB).
Loan Estimate Sample: Page 1
date issued applicants property address sale price of the property loan term purpose product loan type loan ID # rate lock projected payment
Loan Estimate
form provides a means for borrowers to compare loan offers
What are some items that are paid in advance?
insurance interest (buyer)
consummation
is the time that a consumer becomes contractually obligated on a credit transaction
TRID rule
lenders must give a copy of the booklet, "Your home loan toolkit" to every person at the time of application for a loan
TRID rule
lenders must provide a Loan Estimate of settlement costs at the time of loan application or within three business days of application.
A loan application exists once
name borrower's income borrower's Social Security number property address estimated value of property amount of mortgage loan sought by the consumer
Does signing the Closing Disclosure document indicate acceptance of the loan?
no
Prorated Settlement Charges
taxes insurance mortgage interest
Referral fees are strictly forbidden for these services:
title search title insurance home inspection survey appraisal loan credit report attorney
What does the abbreviation TIP stand for?
total interest percentage
comparisons
total of principal, interest, mortgage insurance, and loan costs the borrower will have paid and the principal that will have been paid off in 5 years annual percentage rate (APR) total interest percentage (TIP)
