Real Estate Closing Key Terms

Flashcards reviewing closing procedures in real estate transactions.

Accrued Items

Items that are typically prorated such as water bills, interest, and taxes.

Affiliated Business Arrangement

An arrangement where a package of services (real estate, title insurance, mortgage, etc.) is offered to consumers, provided certain disclosures are made.

Closing

The conclusion of a real estate sales transaction where title is transferred in exchange for payment.

Closing Disclosure

A form that itemizes all charges paid by the buyer and seller in connection with the settlement.

Closing Statement

An accounting of the debits and credits of the buyer and seller in a real estate transaction.

Credit

An amount entered in a person's favor or an amount already paid.

Debit

A charge; an amount that must be paid.

Electronic Fund Transfer

The process of transferring funds electronically, often used in real estate closings.

Escrow Account/Impound Account

An account held by a third party (often a lender) that holds funds for payment of taxes, insurance, etc.

Escrow Closing

Closing handled by a third party, often used when parties cannot be physically present.

Loan Estimate

A preliminary disclosure of loan terms and closing costs that must be provided to the consumer within three business days of loan application.

Mortgage Disclosure Improvement Act (MDIA)

Federal act intended to prevent consumers from receiving an enticingly low interest rate at the initial loan application and being charged more fees at settlement. This is now incorporated in the Consumer Financial Protection Bureau disclosure requirements.

Mortgage Servicing Transfer Statement

A notification to borrowers that their mortgage servicing rights have been transferred to another entity.

Prepaid Items

Expenses paid in advance by the seller, for which they must be reimbursed.

Prorations

Dividing financial responsibility between the buyer and seller for items such as loan interest, taxes, fuel, and utility bills.

Real Estate Settlement Procedures Act (RESPA)

A federal law requiring certain disclosures about the mortgage and settlement process and prohibiting certain practices that increase the cost of settlement services.

Survey

A map illustrating the boundaries of the property.

Truth in Lending and RESPA Integrated Disclosure Rule (TRID)

Federal rule combining the Truth in Lending Act and RESPA disclosures to provide clarity to consumers.