Hawaii Pre-Licensing National Practice Exam

In a real estate closing, which expense is generally paid by the buyer?

1. Title insurance

2. Inspection fees

3. Recording of a new mortgage

4. Property taxes

The correct answer is: Recording of a new mortgage

In a real estate closing, the buyer typically pays for the recording of a new mortgage. This expense covers the official documentation of the mortgage with the appropriate local government office, which is essential for establishing the lender's security interest in the property. Recording ensures that the mortgage is public record, giving notice to future purchasers and lenders regarding the property's financing and any encumbrances that may exist. While buyers may also be responsible for title insurance and inspection fees, these expenses can vary depending on local customs and negotiations during the closing process. Property taxes are often prorated, and responsibility may shift depending on the closing date. Nonetheless, the recording of a new mortgage is a standard obligation for buyers to ensure their ownership and the legal standing of the mortgage.