Texas Real Estate Sales Agent ExamFinancingMedium
A buyer is closing on a new home. The lender provides a document detailing all costs associated with the loan, including the interest rate, monthly payment, and total closing costs, at least three business days before closing. What is this document called?
- AClosing Disclosure (CD)
- BGood Faith Estimate (GFE)
- CTruth in Lending Disclosure (TIL)
- DLoan Estimate (LE)
Show answer & explanationAnswer & explanation
Correct answer: A. Closing Disclosure (CD)
The Closing Disclosure (CD) is the document provided by the lender to the borrower at least three business days before closing, detailing all final loan terms, costs, and cash to close. It replaced the HUD-1 Settlement Statement and the final Truth in Lending Disclosure for most mortgage transactions under TRID.
Why the other options are wrong
- B. The Good Faith Estimate (GFE) was replaced by the Loan Estimate (LE) for most mortgage loans.
- C. The Truth in Lending Disclosure (TIL) was replaced by the Closing Disclosure (CD) and Loan Estimate (LE) for most loans.
- D. The Loan Estimate (LE) is provided at the beginning of the loan application process, not three days before closing.
Closing Disclosure (CD)
A five-page form that provides final details about the mortgage loan selected. It includes the loan terms, projected monthly payments, and how much will be paid in fees and other costs to get the mortgage (closing costs).
- Provided by lender at least 3 business days before closing.
- Replaced HUD-1 and final TIL for most loans.
- Details final loan terms and all closing costs.
Memory trick: LE and CD are your loan's best friends, from start to end!