How did you do?
1. Which one of the following is not a closing cost?
A. Inspection fees
B. Title insurance
C. Down payment
D. Recording fees
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 "good faith estimate" provided by the mortgage company binding?
A. Yes
B. No
The answer is B. The lender is required by federal law to provide you with a good faith estimate (or GFE) of your closing costs within three days of your loan application. However, lenders are not legally bound to these figures and there is no penalty for inaccuracy, though most will try to stay close to the initial estimate.
3. When will I find out how much money I need to bring to closing?
A. One week before closing.
B. Three days before closing
C. 24-hours before closing
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.
4. Will I be able to pay for my closing with a personal check?
A. Yes
B. No
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.
5. If I'm refinancing my home, do I need title insurance?
A. Yes
B. No
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.
6. Which government form includes a list of my closing costs?
A. 1040
B. HUD-1
C. I-9
D. 401K
The answer is B. The HUD-1 settlement form is the government form that lists all of your closing costs.
7. How long will my Owner's Title Policy protect me?
A. 1 year
B. 5 years
C. 99 years
D. As long as I or my heirs have an interest in the property
The answer is D. Your Owner's Policy paid for as a one-time fee at closing 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.
