Florida Broker Practice Exam

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What does RESPA aim to inform buyers about regarding closing costs?

Types of loans available
Amount and type of charges
Credit scores required
Potential loan penalties

The correct answer is: Amount and type of charges

RESPA, which stands for the Real Estate Settlement Procedures Act, is designed to ensure that homebuyers are fully informed about the costs associated with the closing process. The act specifically requires lenders to provide borrowers with a Good Faith Estimate that outlines the amount and types of charges that they can expect to pay at closing. This transparency is crucial as it allows buyers to better understand the financial commitments involved in purchasing a property and helps to prevent surprises when the closing documents are presented. By focusing on the amount and type of charges, RESPA empowers buyers with the necessary information to make informed decisions and compare different loan offers more effectively. It also aims to reduce the risk of abusive practices in real estate settlements, ensuring that consumers are aware of the fees they are paying and why they are being charged these amounts. This information is critical for creating a more predictable and transparent homebuying experience.