6.4 Reading the Closing Disclosure Page by Page

6.4 Reading the Closing Disclosure Page by Page

Core Principle: The DBPR Candidate Information Booklet for the broker examination states plainly that, in addition to the twelve content areas, candidates must be familiar with the Closing Disclosure documents in order to answer closing related questions, and the booklet supplies a sample closing scenario with worked questions. Content Area VI, Closing Transactions, is 12% of the examination. This section is about knowing where each item lives on the form.

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1. The Five Pages at a Glance

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2. Page 2 — Closing Cost Details

Page 2 is organized into eight lettered sections, and each line is placed in one of three columns: Borrower-Paid, Seller-Paid, or Paid by Others.

[!IMPORTANT] Section E is the Florida transfer-tax section. The documentary stamp tax on the deed ($0.70 per $100 or fraction in 66 counties), the documentary stamp tax on the note ($0.35 per $100 or fraction statewide), and the nonrecurring intangible tax ($0.002 per dollar of new mortgage debt) all appear on page 2 under Taxes and Other Government Fees. Real estate commissions, by contrast, appear on page 2 in Section H.

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3. Page 3 — Summaries of Transactions

Page 3 carries the two balance sheets, and this is where most closing questions are answered.

  BORROWER'S TRANSACTION                 SELLER'S TRANSACTION
  ----------------------------------     ----------------------------------
  K. Due from Borrower at Closing        M. Due to Seller at Closing
     01 Sale Price of the Property          01 Sale Price of the Property
     02 Sale Price of Personal Property     02 Sale Price of Personal Property
     03 Closing Costs Paid at Closing       Adjustments for items PREPAID
     Adjustments for items PREPAID          by seller (taxes, assessments,
     by seller                              HOA dues)
  ----------------------------------     ----------------------------------
  L. Paid Already by or on Behalf        N. Due from Seller at Closing
     of Borrower at Closing                 01 Excess Deposit
     01 DEPOSIT                             02 Closing Costs Paid at Closing
     02 LOAN AMOUNT                         03 Existing Loan(s) Payoff
     03 Existing Loan(s) Assumed               Seller Credit
     04 Seller Credit                        Adjustments for items UNPAID
     Adjustments for items UNPAID            by seller
     by seller (taxes in arrears)
  ----------------------------------     ----------------------------------
  CASH TO CLOSE = K - L                  CASH TO SELLER = M - N

[!NOTE] The loan amount is a CREDIT to the borrower, not a debit. This is the single most missed item on the form. The borrower does not pay the lender at closing — the lender's money arrives on the borrower's behalf, reducing the cash the borrower must bring. It therefore appears in Section L, Paid Already by or on Behalf of Borrower at Closing.

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4. Working the CIB Sample Closing

The DBPR broker booklet's sample closing supplies the pattern. A duplex sells for $170,000, the buyer obtains a new 80% LTV mortgage, the buyer's binder deposit is $3,000, and the seller pays the deed recording fee of $18.50.

Government transfer taxes, and where they go

The other sample items

[!IMPORTANT] Two questions to ask on every Closing Disclosure item. First: is this a cost or a transaction element? Costs go on page 2; transaction elements — price, deposit, loan, payoffs, prorations — go on page 3. Second: does it reduce what this party must bring, or increase it? Reductions are credits; increases are debits. Those two questions answer nearly every closing question the examination asks.

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5. Delivery Timing

The placement rules above sit inside the TRID delivery framework covered in Section 7.3, and the two are frequently combined in a single question.