PSI Virginia Real Estate Practice Exam

What occurs during the closing phase of the lending process?

1. Forms are signed, and funds are disbursed

2. The loan application is submitted for review

3. Property appraisal is conducted

4. The borrower receives a pre-approval letter

The correct answer is: Forms are signed, and funds are disbursed

During the closing phase of the lending process, the primary focus is on finalizing the transaction between the lender and the borrower. This typically involves the signing of various forms and documents that solidify the agreement and terms of the loan. At this point, critical legal paperwork is completed, and the signed documents are essential for the transfer of ownership and the lending process. Additionally, funds are disbursed during this phase, which allows for the payment of the purchase price to be made, as well as covering closing costs and related fees. This disbursement of funds marks the transition from prospective borrower to homeowner as the transaction officially closes. The other options focus on earlier stages of the lending process. For example, the submission of the loan application for review occurs prior to closing, and it is an essential step in getting the loan approved but does not happen during the closing phase. The property appraisal is also a preliminary step that ensures the property's value is adequate to support the requested loan amount. Lastly, receiving a pre-approval letter happens even earlier in the process, indicating that the borrower has been preliminarily evaluated and is likely to be approved for a loan based on various financial criteria.