Section 21, Unit 2/3 Study

Your client, Jim, is headed to closing on a nice condo that meets all of his needs: close to work, close to Mom, speedy Internet service. He's been a bit high-strung through the whole process, so you aren't surprised when he calls you and says, "My lender just gave me ANOTHER form! Will it never end?" After you establish he's received the Closing Disclosure, what two things do you tell him?

- "All you need to do with that form is to check for accuracy and for agreement with your Loan Estimate. Check every detail, and do it now, not later." - "If you have any questions about what you see on the form, contact your lender right away and have them explain it to you."

When consumers receive the Loan Estimate from a lender, what four main tasks they should perform on page one?

1. Check personal information for accuracy 2. Make sure they understand loan terms 3. Ensure projected payments are affordable 4.Ensure closing costs are affordable

Debit

An amount a party has to pay

Credit

An amount that appears as a sum in the party's favor—an already paid, reimbursed, or promised amount

Buyer Ed is reviewing the Loan Estimate he received from the lender he's working with. He notices the loan terms include a prepayment penalty. Because he's a savvy consumer, which of the following does Ed do?

Ask the lender if there are other options available that would not involve a prepayment penalty.

Which of the following is NOT part of the Other Considerations section of the Loan Estimate?

Comparisons

Which of the following is part of the Other Disclosures section?

Liability After Foreclosure

Loan Estimate form (LE)

Lists charges the buyer is likely to pay at settlement

Maria is a borrower reviewing her Closing Disclosure. She notices a section under "Other Costs" with a number of fees that were not shown on her Loan Estimate, such as the commissions to the real estate brokers and the home inspection fee. Should Maria contact her lender about this issue?

No, these are costs that are part of the total cost to close but aren't part of obtaining the loan, so they weren't required to be on the Loan Estimate.

Betty is purchasing a home and has received Loan Estimates from three lenders. As she compares the terms of the loans being offered, where can she find the section that allows her to make comparisons between loans with different interest rates?

Page three

Closing Disclosure form (CD)

Provides information about all costs that will be settled at closing

Maria is a borrower reviewing her Closing Disclosure. She notices that the appraisal fee is listed under "Paid by Others" and has an L listed with the amount. What does this mean?

The L indicates that the creditor pays the item at consummation.

Borrowers Ava and Liam are expecting their first child and want to be sure they're both comfortable with the monthly payments they'll be responsible for in the new house. Under the "Projected Payments" section of their Loan Estimate, Ava and Liam can review ______.

The estimated breakdown of each monthly mortgage payment, including any items that will be included in escrow

The final page of the Closing Disclosure provides loan calculations that tell the consumer how much ______.

The loan costs, including total payments, finance charge, and TIP

Margot reviewed page three of her Closing Disclosure to see the amounts she'll pay and receive, and the total cash amount. She located this information under the "Summaries of Transaction" in the "Seller's Transaction" table, which is completed by ______.

The settlement agent

Victor is a buyer reviewing the Closing Disclosure he received from his lender. On the last page of the form, he sees a signature line. By signing the form, Victor has ______.

Confirmed receipt of the Closing Disclosure

Although the Closing Disclosure lists all amounts as accurately as possible, some costs must be estimated. Why?

Property taxes and insurance may change over the life of the loan, resulting in changes to the required escrow amounts.

Buyers Romy and Steven are looking over closing documents and don't know if the Loan Estimate matches everything on the Closing Disclosure. Usually, amounts shown on the Closing Disclosure that don't exactly match the figures on the Loan Estimate will be due to _______.

Updates to reflect the terms of the borrower's legal obligation when the loan closes