Finance
Under the federal Truth in Lending Act (TILA), what document summarizes key loan terms and must be provided to borrowers within three business days of application?
AHUD-1 Settlement Statement
BClosing Disclosure
CLoan Estimate✓ Correct
DGood Faith Estimate
Explanation
Under the TRID rules (TILA-RESPA Integrated Disclosure), lenders must provide a Loan Estimate within three business days of receiving a completed mortgage application, replacing the old Good Faith Estimate.
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Key Terms to Know
Loan-to-Value Ratio (LTV)
The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
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