Free National / General study sheet
Financing and Settlement Texas Real Estate Exam Cheat Sheet
Quick answerFinancing questions move from the borrower's repayment promise and security instrument to loan programs, lender requirements, federal consumer rules, and the documents and money used at settlement.
Source-checked National / General portion
Use the national rule unless the question identifies Texas law or a TREC form. The 7-item weight belongs to the National / General portion. Texas-specific recall cards below are bridges to the separate state portion.
Classify the fact under official subtopic A, B, C, or D. Then identify the document, program, insurance, federal rule, deadline, or settlement entry before using any numbers.
Exam scope
What Pearson tests
Verified against the official content outline.
- A. Financing concepts and components: methods, seller financing, land contracts, lien and title theory, deed of trust, market sources, loan types, programs, and clauses
- B. Lender requirements: conventional, FHA, VA, USDA, qualification, LTV, hazard and flood insurance, PMI, and MIP
- C. Federal regulations and bodies: TILA, Regulation Z, TRID, CFPB, Loan Estimate, Closing Disclosure, RESPA, ECOA, fraud, and predatory lending
- D. Settlement and closing: participants, documents, debits, credits, prorations, funding, disbursement, delivery, and recording
Decision traps
Common traps to catch
Check the governing source material.
- The promissory note is the written promise and evidence of the debt. The mortgage or deed of trust creates the lien securing it.
- The Loan Estimate is delivered or mailed no later than the third business day after application. The Closing Disclosure must be received no later than three business days before consummation.
- The scheduled 80 percent point is generally a borrower-request PMI threshold. Automatic termination generally uses the scheduled 78 percent point and requires the borrower to be current.
- RESPA prohibits kickbacks and unearned fees tied to settlement-service referrals. It does not prohibit every bona fide payment for actual services.
- A deed, note, security instrument, Loan Estimate, Closing Disclosure, and settlement statement each perform a different job.
Essential vocabulary
Financing and Settlement terms to know
- Promissory note
- The borrower's written promise to repay the debt.
- Deed of trust
- A three-party security instrument commonly used in Texas to secure repayment.
- Loan-to-value ratio
- The loan amount divided by the value used by the lender.
- Amortization
- Repayment of debt through scheduled installments that reduce principal over time.
- Discount point
- One percent of the loan amount, often paid in connection with the loan's pricing.
- RESPA
- The federal settlement law addressing disclosures, servicing, escrow, and prohibited referral payments.
- Closing Disclosure
- The TRID disclosure that presents final loan and closing terms for a covered transaction.
- Secondary mortgage market
- The market in which existing mortgage loans and related interests are bought and sold.
Check your recall
Can you answer these without notes?
Open each card only after you commit to an answer.
1What separates the note from the security instrument?
The note is the written repayment promise and evidence of debt. The security instrument creates the lien.
2When do 80 percent and 78 percent matter for conventional PMI?
At scheduled 80 percent, a qualifying borrower may request cancellation. At scheduled 78 percent, automatic termination generally applies if the borrower is current.
3What are the two TRID timing rules?
Deliver or mail the Loan Estimate by the third business day after application; ensure receipt of the Closing Disclosure three business days before consummation.
4What does a debit mean at settlement?
A charge to that party. A credit is an amount in that party's favor.
5How does a land contract differ from a mortgage-financed deed transfer?
The buyer typically takes possession and pays over time while the seller retains legal title until the contract requirements are met.
6What insurance distinction does Pearson test?
Hazard insurance protects against covered property losses, flood insurance covers flood risk, conventional PMI protects the lender, and FHA uses MIP.
7Which law is associated with settlement-service kickbacks?
RESPA and Regulation X. Bona fide payment for actual services is a separate analysis.
8Which events near closing should not be treated as synonyms?
Signing, delivery, consummation, funding, disbursement, and recording.
Use the sheet, then retrieve
Turn recognition into recall.
Read the full lesson when a definition is fuzzy. Then answer the topic questions without looking back at this sheet.
Primary sources
Checked .
- Pearson VUE Texas Real Estate Content Outlines
- CFPB, Regulation Z Section 1026.19
- CFPB, Regulation X Section 1024.14
- CFPB, Regulation B
- CFPB, PMI Cancellation
- HUD, FHA Handbook 4000.1
This is exam-prep education, not legal, tax, or transaction advice. Confirm the current law, form, and official exam materials before relying on a rule in practice.