Closing and Funding - Chapter 5

Question 1

The closing disclosure must be provided to the borrower at least _____ days before consummation.

Answer 1

3 business days

Question 2

How long is the lender required to keep the copy of the CD?

Answer 2

5 years

Question 3

True/False - all changes to the CD require a 3 day wait period.

Answer 3

False - 3 day wait is only required if the APR increases by more than 1/8, the loan product changes, the lender adds a prepayment penalty.

Question 4

If things change after consummation, how long does the lender have to provide the borrower with a new CD?

Answer 4

30 days. 60 days for non-numerical clerical errors and document refunds for tolerance violations.

Question 5

What is the periodic interest rate?

Answer 5

Interest rate charged on a loan over a specified period.

ex: Annual interest is 8%. Periodic interest per month is 8/12 = .67%

Question 6

What is a buydown?

Answer 6

A buydown gives borrowers the opportunity to decrease their interest rate.

Question 7

What is a discount point?

Answer 7

The borrower pays discount points based on a percentage of the loan amount to “prepay” interest to obtain a lower note rate for the duration of the loan.