Unit 23: Closing the Real Estate Transaction Flashcards
Accrued Item
On a closing statement, items of expense that are incurred but not yet payable, such as interest on a mortgage loan or taxes on real property.
Affiliated Business Arrangement (ABA)
Practice of one company offering a package of services to consumers.
Closing
The point at which ownership of a property is transferred in exchange for the selling price.
Closing Disclosure
a five-page form that provides final details about the mortgage loan you have selected. It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage (closing costs).
debit and credit
Debit and credits in real estate come up during closing in a real estate transaction. A debit is money you owe, while credit is money owed to you. Debits and credits are described in a closing statement in their sections respectfully.
Escrow
The closing of a transaction through a third party called an escrow agent, or escrowee, who receives certain funds and documents to be delivered on the performance of certain conditions outlined in the escrow instructions.
Loan Estimate (LE)
a three-page form that you receive after applying for a mortgage. The Loan Estimate tells you important details about the loan you have requested. The lender must provide you a Loan Estimate within three business days of receiving your application. The Loan Estimate must be delivered or placed in the mail by the lender, no later than the third business day after the lender receives the consumer’s application.
Prepaid Item
On a closing statement, items that have been paid in advance by the seller, such as insurance premiums and some real estate taxes, for which she must be reimbursed by the buyer.
Proration
Expenses, either prepaid or paid in arrears, that are divided or distributed between buyer and seller at the closing.
Real Estate Settlement Procedures Act (RESPA)
The federal law that requires certain disclosures to consumers about mortgage loan settlements. The law also prohibits the payment or receipt of kickbacks and certain kinds of referral fees.
TILA-RESPA Integrated Disclosure Rule (TRID)
Rule that implements provisions of the Dodd-Frank Act intended to combine and clarify financing disclosures to consumers.
owner’s title policy
provides protection to the homeowner if someone sues and says they have a claim against the home from before the homeowner purchased it. Such a policy comes as close as any document can to providing evidence of ownership of a property that is unencumbered by any past liens or potential claims.
affidavit of title
a sworn statement in which the seller assures the title insurance company (and the buyer) that there have been no judgments, bankruptcies, or divorces involving the seller since the date of the title examination. The affidavit gives the title insurance company the right to sue the seller if his statements in the affidavit are incorrect.
What is included in the Application?
address of the property
loan amount
income of the borrower
contract value of the property
name of the borrower
Social Security number of the borrower
statutory-month method
In this method, the yearly charge is divided by 12 to determine a monthly amount. The monthly charge then is divided by the actual number of days in the month in which the closing occurs. This final number is the daily charge for that month.
