Finance
A Connecticut homeowner refinances their mortgage to lower the interest rate. At the closing of the refinance, the lender is required to provide which document to the borrower at least 3 business days before closing?
AThe HUD-1 settlement statement
BThe Closing Disclosure✓ Correct
CThe Loan Estimate
DThe Good Faith Estimate
Explanation
Under TRID (TILA-RESPA Integrated Disclosure), the lender must provide the Closing Disclosure at least 3 business days before the loan closes. The Closing Disclosure replaced the HUD-1 for most mortgage transactions after October 2015.
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Key Terms to Know
Debt-to-Income Ratio (DTI)
A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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