Unit 14: Closing the Real Estate Transaction

Question 1

This is considered the conclusion of the real estate sales transaction

Answer 1

The closing

Question 2

The closing involves these two major events

Answer 2

1. The promises made in the sales contract are fulfilled
2. The mortgage funds are distributed to the buyer

Question 3

What buyer’s concerns must be address at the closing

Answer 3

1. The results of the inspections i.e. termite, radon, water, septic systems etc.
2. The survey (boundary of the property)
3. The title evidence including the seller’s deed
4. Any lease if a tenant resides on the property.

Question 4

In a real estate contract, the buyer usually reserves the right to make a

Answer 4

final inspection or walkthrough (buyer and agent make sure the property was well maintained and no alterations have taken place

Question 5

What is the seller’s main interest at the closing

Answer 5

Receive payment for the property; that the buyer has obtained the necessary financing and will have sufficient funds to complete the sale.

Question 6

The closing is known by different names

Answer 6

Settlement or transfer where they are “passing papers”

Question 7

Who attends the closing?

Answer 7

The buyer, the seller, the real estate professionals on both sides; seller’s and buyer’s attorneys; rep from the lender institution involved with the mortgage loan, ,a rep. from the title insurance company

Question 8

In MA. the closing must be conducted by an

Answer 8

Attorney

Question 9

When the sale is completed, it is signed, sealed and delivered by the seller to the buyer and accepted

Answer 9

The exchange

Question 10

This is a federal law that requires certain disclosures about the mortgage and settlement process and prohibits certain practices that increase the cost of settlement services such as kickbacks and referral fees

Answer 10

The Real Estate Settlement Procedures Act (RESPA)- must be a closing disclosure form provided on the day of the sale; includes all the financial details and every penny is accounted for; the closing attorney prepares this document.

Question 11

RESPA prohibits certain practices that increase the cost of settlement services

Answer 11

1. Kickbacks and fee-splitting for referrals of settlement services
2. Prohibits the home seller from requiring that the buyer purchase title insurance from a specific company
3. Banks can only require reasonable deposits for taxes.

Question 12

This form replaces the initial Truth in Lending Statement (TIL) and the Good Faith Estimate (GFE). It highlights the interest rate, monthly payment, and total closing costs

Answer 12

Loan Estimate given to the consumer three days after a loan application is submitted to the lender.

Question 13

This form itemizes all charges that are normally paid by a borrower and a seller in connection with settlement

Answer 13

Closing disclosure form- borrower must receive this three days before the closing

Question 14

This is an accounting of the parties debits and credits

Answer 14

The closing statement

Question 15

This is the amount that a party owes and must pay at closing

Answer 15

a debit

Question 16

Amount that has already been paid- or entered in a person’s favor

Answer 16

a credit