objective 4: describe the steps involved in preparing a closing statement

Question 1

The completion of a closing statement is now realized in the ___

Answer 1

Closing disclosure

Question 2

The completion of a closing statement involves an accounting of the parties ___ and ___

Answer 2

debits and credits

Question 3

An amount that a party owes and must pay at closing

Answer 3

Debit

Question 4

An amount entered in a person’s favor - an amount that has already been paid, an amount being reimbursed, or an amount the buyer promises to pay in the form of a loan

Answer 4

credit

Question 5

To determine the amount a buyer needs at closing, the buyer’s ___ are totaled

Answer 5

debits

Question 6

The buyer’s ___ includes the earnest money (already paid), balance of the loan the buyer obtains or assumes, and the seller’s share of any prorated items the buyer will pay in the future.

Answer 6

Credits

Question 7

The total of the buyer’s ___ is subtracted from the total ___ to arrive at the actual amount of cash the buyer must bring to closing.

Answer 7

Credits are subtracted from debits

Question 8

Principal amount of a new mortgage is a(n) ___ to the ___.

Answer 8

credit to the buyer

Question 9

Payoff of existing mortgage is is a(n) ___ to the ___.

Answer 9

Debit to the seller

Question 10

Unpaid principal balance if assumed mortgage is a(n) ___ to the buyer AND a(n) ___ to the seller.

Answer 10

Credit to the buyer
Debit to the seller

Question 11

Unpaid principal balance if assumed mortgage is a credit to the ___ AND a debit to the ___.

Answer 11

Credit to the buyer
Debit to the seller

Question 12

Accrued interest on existing assumed mortgage is a credit to the ___

Answer 12

Buyer

Question 13

Accrued interest on existing assumed mortgage is a(n) ___ to the buyer

Answer 13

credit

Question 14

Accrued interest on existing assumed mortgage is a(n) ___ to the seller

Answer 14

debit

Question 15

Accrued interest on existing assumed mortgage is a debit to the ___

Answer 15

seller

Question 16

Accrued interest on existing assumed mortgage is ___

Answer 16

prorated

Question 17

Tenant’s security deposit is a credit to the __

Answer 17

buyer

Question 18

Tenant’s security deposit is a(n) ___ to the buyer

Answer 18

credit

Question 19

Tenant’s security deposit is debit to the ___

Answer 19

seller

Question 20

Tenant’s security deposit is ___ to the seller

Answer 20

debit

Question 21

Purchase money mortgage is a credit to the ___ and debit to the ___

Answer 21

Credit to buyer
Debit to seller

Question 22

Purchase money mortgage is a(n) ___ to the buyer, and a(n) ___ to the seller

Answer 22

Credit to buyer
Debit to seller

Question 23

Unpaid water and other utility bills are a credit to the ___, debit to the ___, and ___

Answer 23

Credit to buyer
Debit to seller
Prorated

Question 24

Unpaid water and other utility bills are a(n) ___ to buyer, ___ to seller, and ___

Answer 24

Credit to buyer
Debit to seller
prorated

Question 25

Buyers earnest money are ___ to seller, and ___ to buyer

Answer 25

debit to seller credit to buyer

Question 26

Buyers earnest money are debit to ___, and credit to ___

Answer 26

debit to seller credit to buyer

Question 27

The selling price of property is ___ to buyer, and ___ to seller

Answer 27

Debit to buyer Credit to seller

Question 28

The selling price of property is debit to ___, and credit to ___

Answer 28

Debit to buyer Credit to seller

Question 29

Fuel oil on hand (valued at current market price) is ___ to buyer, ___ to seller, and ___

Answer 29

Debit to buyer Credit to seller Prorated

Question 30

Fuel oil on hand (valued at current market price) is debit to ___, credit to ___, and ___

Answer 30

Debit to buyer Credit to seller Prorated

Question 31

Prepaid insurance and tax reserve for mortgage assumed by buyer is ___ to buyer, ___ to seller, and ___

Answer 31

Debit to buyer Credit to seller Prorated

Question 32

Prepaid insurance and tax reserve for mortgage assumed by buyer is debit to ___, credit to ___, and ___

Answer 32

Debit to buyer Credit to seller Prorated

Question 33

Refund to seller of prepaid water charges & similar utility expenses is debit to ___, credit to ___, and ___

Answer 33

Debit to buyer Credit to seller Prorated

Question 34

Refund to seller of prepaid water charges & similar utility expenses is ___ to buyer, ___ to seller, and ___

Answer 34

Debit to buyer Credit to seller Prorated

Question 35

Accrued general real estate taxes is debit to ___, credit to ___, and ___.

Answer 35

Debit to seller Credit to buyer Prorated

Question 36

Accrued general real estate taxes is ___ to buyer, ___ to seller, and ___

Answer 36

Debit to seller Credit to buyer Prorated

Question 37

___ include the purchase price plus the buyer's share of any prorated items the seller has prepaid

Answer 37

Credits

Question 38

The seller’s ___ includes expenses, share of prorated items to be paid later by the buyer, and the balance of any mortgage or other lien that the seller pays off.

Answer 38

Debits

Question 39

The total amount of the seller’s ___ is subtracted from their total ___ to determine the amount the seller will receive

Answer 39

Debits subtracted from credits

Question 40

If the broker is the agent for the seller, who is normally responsible for paying the commission?

Answer 40

Seller

Question 41

If an agency agreement exists between a broker and the buyer, or if 2 agents are involved (1 for seller, 1 for buyer), the commission may be distributed as an expense between ___.

Answer 41

both parties

Question 42

If either party's attorney will be paid from closing proceeds, that party will be charged with the expense in the ___.

Answer 42

Closing statement

Question 43

This expense may include fees for the preparation or review of documents or for representing the parties at settlement

Answer 43

Attorney's fees

Question 44

The ___ usually pays for recording charges (filing fees) necessary to clear all defects and furnish the opposite party with a marketable title.

Answer 44

Seller

Question 45

Items customarily charged to the ___ include recording of release deeds or satisfaction of mortgages.

Answer 45

seller

Question 47

Who customarily pays for the satisfaction of mechanics' liens?

Answer 47

Seller

Question 48

The ___ pays for recording charges that arise from the actual transfer of title

Answer 48

Buyer

Question 49

Transfer tax is most often paid by the ___

Answer 49

seller

Question 50

In IL, state and county transfer taxes are usually paid by the ___ in accordance with most contracts.

Answer 50

Seller

Question 51

The ___ customarily pays for the lender’s policy, which ensures that the lender has a valid first lien.

Answer 51

Buyer

Question 52

Because the seller is usually required by contract to furnish evidence of good title, who usually pays for the owner’s title insurance policy?

Answer 52

Seller

Question 52

If the buyer’s attorney inspects the title evidence or if the buyer purchases a title insurance policy, who is charged for this expense?

Answer 52

Buyer

Question 53

In most areas, the ___ is required to furnish evidence of good title and pay for the title search.

Answer 53

Seller

Question 53

Loan fees may not ___ before closing

Answer 53

increase

Question 54

Loan fees may not increase before ___

Answer 54

closing

Question 54

If there is an increase in loan fees prior to closing, the lender has ___ to revise the loan estimate

Answer 54

3 business days

Question 54

If the buyer assumes the seller's existing mortgage, the buyer may be required to pay a(n) ___.

Answer 54

Assumption fee

Question 55

Under the terms of some mortgage loans, the seller may be required to pay a(n) ___ or ___ for paying off the mortgage loan before its due date

Answer 55

prepayment charge or penalty

Question 56

A borrower starts an escrow account at closing by depositing funds to cover at least the amount of ___ from the date of the lien to the end of the current month.

Answer 56

unpaid real estate taxes

Question 57

The buyer receives a credit from the seller at closing for any unpaid ___

Answer 57

taxes

Question 58

After the initial deposit of unpaid taxes into the escrow account, an amount equal to one month's portion of the estimated taxes is included in the borrower's ___

Answer 58

monthly mortgage payment

Question 59

The first year's premium for fire or hazard insurance is generally paid ___, and after that an amount equal to ___ is paid.

Answer 59

in full at closing one month's premium

Question 60

The borrower's monthly loan payment includes which 4 things?

Answer 60

1) Principal 2) interest 3) 1/12th of estimated taxes 4) 1/12th of insurance

Question 69

Expenses paid out of the closing proceeds are debited only to...

Answer 69

the party making the payment

Question 70

What are the 2 main components for the buyer's purchase price?

Answer 70

1) Down payment 2) mortgage

Question 71

The ___ is usually composed of the earnest money and any additional money the buyer needs to meet the total cost of the purchase

Answer 71

Down payment

Question 72

The downpayment is usually composed of ___ and ___

Answer 72

earnest money and any additional money the buyer needs to meet the total cost of the purchase

Question 73

Unless the property is selling short, the seller's closing costs will all be ___ from the sales price at closing

Answer 73

subtracted

Question 74

A home was purchased for $100,000. The lender supplied an $80,000 mortgage. $5,000 in earnest money was supplied by the escrow agent. The buyer's closing charges are $3,000. How much total cash does the buyer need to close?

Answer 74

$18,000 ($15,000 remaining down payment, plus $3,000 closing costs)