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How well do you know the closing process? Homeclosing101 gives you a quick way to assess your current understanding of the closing process.

1. Which one of the following is not a closing cost?

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Answer:

The answer is C. The down payment on your house is not a closing cost. It is usually paid ahead of time.

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Answer:

The answer is C. The down payment on your house is not a closing cost. It is usually paid ahead of time.

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Answer:

The answer is C. An earnest money deposit is not a closing cost. It is usually (but not always) submitted and held by your title company and represents to your seller that the offer you’ve submitted to buy their property was made in good faith and your intent to buy should be taken seriously.

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Answer:

The answer is C. The down payment on your house is not a closing cost. It is usually paid ahead of time.

2. Is the “Loan Estimate” provided by the mortgage company binding?

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Answer:

The answer is A. Your lender must provide you a Loan Estimate within three business days of receiving your application, according to the Consumer Financial Protection Bureau. The Loan Estimate outlines important information about your home loan, including the estimated interest rate, monthly payment and total closing costs for the loan. The lender is legally bound to the fees listed on the Loan Estimate they provided, but they are an approximation. While the origination fee cannot change at closing, the third-party fees can be changed by up to 10 percent of the initial quote. When you receive a Loan Estimate, the lender has not yet approved or denied your loan application.

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Answer:

The answer is A. The lender is required by federal law to provide you with a good faith estimate (GFE) of your closing costs within three days of your loan application. The lender is legally bound to the fees listed on the GFE they provided, but it is an approximation. While the origination fee cannot change at closing, the third-party fees can be changed by up to 10 percent of the initial quote. The lender does not have to continue the lending process with someone who is not eligible to get a mortgage from their institution

3. Who will conduct my closing?

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Answer:

The answer is E. Who conducts your closing varies based on where you live. Ask your Realtor or lender who will conduct the closing where you live.

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Answer:

The answer is E. Who conducts your closing varies based on where you live. Ask your Realtor or lender who will conduct the closing where you live.

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Answer:

The answer is E. Who conducts your closing varies based on where you live. Ask your Realtor or lender who will conduct the closing where you live.

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Answer:

The answer is E. Who conducts your closing varies based on where you live. Ask your Realtor or lender who will conduct the closing where you live.

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Answer:

The answer is E. Who conducts your closing varies based on where you live. Ask your Realtor or lender who will conduct the closing where you live.

4. When will I find out how much money I need to bring to closing?

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Answer:

The answer is C. Under the federal law called The Real Estate Settlement Procedures Act or RESPA, consumers who ask are entitled to see the information available on the HUD-1 settlement statement 24-hours in advance of closing. However, the lender must approve the information on the settlement statement and may not give that approval until right before the closing. Therefore, the information is not always available 24-hours in advance. As soon as the title company receives the approved HUD-1 form from the lender, they will share it with you.

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Answer:

The answer is B. According to the Consumer Financial Protection Bureau’s final rule, your lender must deliver a Closing Disclosure at least three business days prior to the date of consummation of the transaction (your closing date). Generally, if changes occur between the time the Closing Disclosure form is given and the closing, the lender must deliver a new Closing Disclosure to the homebuyer and the homebuyer must be given three additional business days to review that form before closing.

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Answer:

The answer is B. According to the Consumer Financial Protection Bureau’s final rule, your lender must deliver a Closing Disclosure at least three business days prior to the date of consummation of the transaction (your closing date). Generally, if changes occur between the time the Closing Disclosure form is given and the closing, the lender must deliver a new Closing Disclosure to the homebuyer and the homebuyer must be given three additional business days to review that form before closing.

5. Will I be able to pay for my closing with a personal check?

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Answer:

The answer is B. Unfortunately, no. The title company or settlement agent has to make sure that there are enough funds to pay off old mortgages and other fees. For this reason, the title company will require a certified check be brought to closing to assure that the funds are good. You can obtain a certified check from your bank.

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Answer:

The answer is B. Unfortunately, no. The title company or settlement agent has to make sure that there are enough funds to pay off old mortgages and other fees. For this reason, the title company will require a certified check be brought to closing to assure that the funds are good. You can obtain a certified check from your bank.

6. If I’m refinancing my home, do I need title insurance?

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Answer:

The answer is A. Yes, when you refinance the lender considers it a new loan, even if you are using the same lender. They will require a new title search to look for any problems with the title, and will usually require you to purchase a Lender’s Policy to protect their investment. You will not need to purchase an additional Owner’s Policy. If you purchased an Owner’s Policy at the time of the original closing, it is in effect for as long as you or your heirs have an interest in the property. Ask your title professional if you qualify for a refinance rate.

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Answer:

The answer is A. Yes, when you refinance the lender considers it a new loan, even if you are using the same lender. They will require a new title search to look for any problems with the title, and will usually require you to purchase a Lender’s Policy to protect their investment. You will not need to purchase an additional Owner’s Policy. If you purchased an Owner’s Policy at the time of the original closing, it is in effect for as long as you or your heirs have an interest in the property. Ask your title professional if you qualify for a refinance rate.

7. Which government form includes a list of my closing costs?

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Answer:

The answer is B. The The Closing Disclosure form is the government form that lists all of your closing costs.

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Answer:

The answer is B. The The Closing Disclosure form is the government form that lists all of your closing costs.

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Answer:

The answer is B. The The Closing Disclosure form is the government form that lists all of your closing costs.

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Answer:

The answer is B. The The Closing Disclosure form is the government form that lists all of your closing costs.

8. Is there a difference between closing, settlement, and closing escrow?

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Answer:

The answer is B. Closing, settlement, and closing escrow can be used interchangeably and all mean finalizing all legal matters associated with buying your house and making your home officially yours.

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Answer:

The answer is B. Closing, settlement, and closing escrow can be used interchangeably and all mean finalizing all legal matters associated with buying your house and making your home officially yours.

9. Who should I consult to learn more about title insurance?

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Answer:

The answer is E. While real estate agents and lenders have some knowledge about title insurance, it is best to talk to a local title agent, settlement agent, or closing attorney for the most accurate information. Find a list of ALTA member companies who can conduct your closing and issue you an Owner’s Policy.

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Answer:

The answer is E. While real estate agents and lenders have some knowledge about title insurance, it is best to talk to a local title agent, settlement agent, or closing attorney for the most accurate information. Find a list of ALTA member companies who can conduct your closing and issue you an Owner’s Policy.

SORRY! You have selected an incorrect answer. Please see the correct response below.

Answer:

The answer is E. While real estate agents and lenders have some knowledge about title insurance, it is best to talk to a local title agent, settlement agent, or closing attorney for the most accurate information. Find a list of ALTA member companies who can conduct your closing and issue you an Owner’s Policy.

SORRY! You have selected an incorrect answer. Please see the correct response below.

Answer:

The answer is E. While real estate agents and lenders have some knowledge about title insurance, it is best to talk to a local title agent, settlement agent, or closing attorney for the most accurate information. Find a list of ALTA member companies who can conduct your closing and issue you an Owner’s Policy.

Congratulations! You have selected the correct answer.

Answer:

The answer is E. While real estate agents and lenders have some knowledge about title insurance, it is best to talk to a local title agent, settlement agent, or closing attorney for the most accurate information. Find a list of ALTA member companies who can conduct your closing and issue you an Owner’s Policy.

10. I will automatically be issued an Owner’s Policy of Title Insurance at closing.

Both A & B are correct, but both A & B may be incorrect as well! The real answer is “not necessarily.”

Answer:

The answer is “not necessarily.” In some parts of the country the answer to this question is yes, in some parts the answer is no. Talk to your lender and title company to find out how it is done in your area, and insist on receiving an Owner’s Policy of Title Insurance. Who pays for the Owner’s Policy varies from state to state and sometimes by county. Ask your title company or Realtor how it is handled where you live.

Both A & B are correct, but both A & B may be incorrect as well! The real answer is “not necessarily.”

Answer:

The answer is “not necessarily.” In some parts of the country the answer to this question is yes, in some parts the answer is no. Talk to your lender and title company to find out how it is done in your area, and insist on receiving an Owner’s Policy of Title Insurance. Who pays for the Owner’s Policy varies from state to state and sometimes by county. Ask your title company or Realtor how it is handled where you live.

11. How long will my Owner’s Title Policy protect me?

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Answer:

The answer is D. Your Owner’s Policy covers you for as long as you or your heirs have an interest in the property. Insist on an Owner’s Policy when buying your home.

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Answer:

The answer is D. Your Owner’s Policy covers you for as long as you or your heirs have an interest in the property. Insist on an Owner’s Policy when buying your home.

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Answer:

The answer is D. Your Owner’s Policy covers you for as long as you or your heirs have an interest in the property. Insist on an Owner’s Policy when buying your home.

Congratulations! You have selected the correct answer.

Answer:

The answer is D. Your Owner’s Policy covers you for as long as you or your heirs have an interest in the property. Insist on an Owner’s Policy when buying your home.

12. How can I find the best price for title insurance?

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Answer:

The answer is D. Title insurance is important and there are many ways to make sure you are getting the best price, including shopping around to reputable title insurance companies and checking with companies your real estate agent or lender are already working with for the best rate. Be sure to visit the Shopping For Title Insurance section of this site.

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Answer:

The answer is D. Title insurance is important and there are many ways to make sure you are getting the best price, including shopping around to reputable title insurance companies and checking with companies your real estate agent or lender are already working with for the best rate. Be sure to visit the Shopping For Title Insurance section of this site.

SORRY! You have selected an incorrect answer. Please see the correct response below.

Answer:

The answer is D. Title insurance is important and there are many ways to make sure you are getting the best price, including shopping around to reputable title insurance companies and checking with companies your real estate agent or lender are already working with for the best rate. Be sure to visit the Shopping For Title Insurance section of this site.

Congratulations! You have selected the correct answer.

Answer:

The answer is D. Title insurance is important and there are many ways to make sure you are getting the best price, including shopping around to reputable title insurance companies and checking with companies your real estate agent or lender are already working with for the best rate. Be sure to visit the Shopping For Title Insurance section of this site.