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Ch. 12

Vocab: Closing the Real Estate Transaction

TermDefinition
Closing The consummation of a real estate contract. Also called a settlement.
Closing Disclosure (CD) Form used for final closing accounting/ disclosure. Form req'd for residential 1-4 units sales involving federally related mortgages (most res. sales except owner financing and all-cash). Not used for closings involving loans not covered by TRID rules.
Credit In a closing statement, money to be received or credit given for money or a stated obligation.
Debit In a closing statement, an expense, money or charge against the seller or buyer.
Double Entry An amount of money showing on the closing statement for both buyer and seller. It's an amount collected from one party and given to the other party, therefore, a debit to the first party and a credit to the other party.
Interim Interest Interest paid on the loan amount from the date of closing through the end of the closing month inclusive. Typically is prepaid at the time of closing.
Loan Estimate (LE) Provides easy comparison of loan costs/terms in such a form that will allow borrower to shop and compare costs of obtaining the loan from all federally related lenders. Borrowers required to be provided the LE within 3 bus. days of the loan application.
Prepaid Interest Interest paid on your mortgage(s) at closing. Mortgage interest is paid in arrears so when you make your monthly payments on the 1st of any given month you're actually paying off interest that was accrued over the previous month. Interest paid in advance.
Prorating Dividing certain settlement costs between buyer and seller.
Real Estate Settlement & Procedures Act (RESPA) Law requiring advance disclosure of settlement costs and other specified information mandating specific closing statement forms and prohibiting kickbacks.
Settlement The consummation of a real estate contract. Also called closing.
Single Entry An item that appears as a debit or credit on either the buyer's or seller's closing statement, but not on both.
TRID TILA/RESPA Integrated Disclosure. Required disclosures from Truth-in-Lending Act and RESPA, was confusing so they combined both elements in what's called TRID to show how previous duplications from TILA and RESPA could go into 1 form: the Loan Estimate.
Closing Statement The final accounting "worksheet" that will indicate indicates receipts and expenses both the buyer and seller will occur & totals showing amount owed by buyer and amt. due to seller. Final accounting will be prepared on a form.
Disclosure Core Worksheet There are 2 primary closing statement forms used in NC: Closing Disclosure (CD) & Closing Disclosure Core worksheet. CD= req'd by RESPA regulations when closing res. sales transaction/ federally related mortgage. In NC, there is an additional form, CDCW.
Created by: laurenk1996