Principles of Real Estate 2 Exam 3 Study Guide with Complete Solutions

Principles of Real Estate 2 Exam 3 Study Guide with Complete Solutions Math calculation – interest ANSWER Simple Interest = Interest Rate (%) × Principal Compound Interest = Amount = P(1+(r/n))^nt Terminology associated with the real estate transaction including closing, funding, servicing, origination, and consummation ANSWER Closing: The closing of a real estate transaction in which all appropriate documents are signed and the proceeds of the mortgage loan are disbursed by the lender is called consummation. It is the process of formulating, executing, and delivering all documents required by a permanent investor, the disbursement of the mortgage funds, and providing for the protection of the investor's security. The required documentation for each closing is determined by the lender or investor in the transaction. Funding: The process of transferring funds to a title or escrow company for disbursement is called funding. When a loan is approved, the lender issues a commitment to make the loan at specified terms. At funding, the lender funds the loan by forwarding sufficient cash. A mortgage banker uses money or a line of credit to fund loans when the final closing conditions have been satisfied. Servicing: