Hawaii Pre-Licensing National Practice Exam

Which document provides an overview of the financial details at the settlement, including closing costs?

1. Closing disclosure

2. HUD-1 form

3. Affidavit of title

4. Loan estimate

The correct answer is: HUD-1 form

The document that provides an overview of the financial details at the settlement, including closing costs, is known as the Closing Disclosure. This document is designed to summarize all costs associated with the settlement of a real estate transaction, outlining important financial details that the buyer and seller need to be aware of prior to closing. The Closing Disclosure is required under the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA), and it must be provided to the borrower at least three business days before closing. This allows the parties involved to review and understand the financial obligations and fees they will be responsible for. The HUD-1 form is also related to settlement costs, but it was primarily used for transactions occurring before the implementation of the TILA-RESPA Integrated Disclosure rule, which introduced the Closing Disclosure. The Affidavit of Title does not detail financial information but rather serves to affirm the seller's ownership and rights to the property. The Loan Estimate is provided earlier in the loan process and offers a summary of loan terms and costs, but it is not the final document presented at closing. In summary, the Closing Disclosure gives a comprehensive overview of all financial aspects at settlement, ensuring that all parties are informed of the total closing costs