Alabama Real Estate Practice Exam

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What does the Real Estate Settlement Procedures Act (RESPA) require lenders to provide to borrowers?

  1. A maximum interest rate

  2. A list of approved properties

  3. A good-faith estimate of closing costs

  4. Pre-approval for mortgages

The correct answer is: A good-faith estimate of closing costs

RESPA requires lenders to provide borrowers with a good-faith estimate of closing costs, which includes an itemized list of all expenses related to the mortgage loan. Options A, B, and D do not pertain to the requirements set forth by RESPA. Option A deals with interest rates, which may be subject to fluctuation and not necessarily a fixed maximum. Option B, while beneficial, is not required by RESPA. Option D refers to pre-approval for mortgages, which is a separate process not regulated by RESPA. Therefore, the most accurate option is C.

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