Florida Real Estate Exam 14-Computations and Closing of

Florida Real Estate Exam 14-(Computations and Closing of Transactions) Flashcards What is the 3rd step of closing a sale?Broker collects any additional monies if called for by the contract, What are the 4 purposes of a closing statement? to account for all monies expended by the buyer and sellerto show how much the buyer owesto show how much the seller will receive from the saleto "prorate" how much buyer and seller owe each other A property was sold and the closing took place on November 15. This property contained ten apartments with rentals due the first of each month for each unit of $750.00.The seller collected the rent for the month on November 1st. How much would the rent proration be, and how would it appear on the settlement statement? Do not round off any of your answers until the end of the problem if it is necessary.$7,500.00 debit the seller and credit the buyer$7,500.00 debit the buyer and credit the seller$4,191.86 debit the seller and credit the buyer$3,945.21 credit the buyer and debit the seller Take 10 apartments x $750= $7,500.00 x 12= 90,000 per year. Divide the number by 365 days to get the daily rate.$90,000 ÷ 365 days = $246.58 per day x 16 days = $3,945.21. Notice that in order to use 365 days, the rent must be annualized! The answer is d- since you will debit (charge) the seller and credit the buyer for the remaining days of the month, including the 15th and the 30th.What are included on the 4 columns of the Closing Disclosure in the Settlement amounts?Column 1 - Description of the costsColumn 2 - Costs paid by the borrower - designated as being paid either "at closing" or "before closing"Column 3 - Costs paid by the seller - designated as being paid either "at closing" or "before closing"Column 4 - Costs paid by others What is the 12th step of closing a sale? A survey of the property is ordered What is included on Section J?the total closing costs to the borrower (D + I from above) How are interest rates expressed?in Annual Rates What is the 2nd step of closing a sale?Broker deposits earnest money in accordance with law, The seller is set to close on November 27. The taxes are $3200 per year and they are in arrears. How much will the seller be charged? The taxes are prorated on midnight the day before closing.Using the Statutory Month Method The seller owes for 10 months and 26 days. $3200 ÷ 12= $266.67 per month x 10 = $2,666.67 plus 26 days.$266.67÷ 30= $8.89 per day x 26 = $231.11. Add the two numbers together. Since taxes are paid in arrears (at the end of the year), we will debit the seller $2897.78 and credit the buyer $2897.78 A 20 unit office building was sold and the closing took place on May 20. The seller collected $1250.00 rent from each of the tenants on May 1st. How much would the rent proration be, and how would it appear on a full settlement statement?Do not round off your answers in this or any other math question until the end of the entire problem.$16, 438.40 debit the seller and credit the buyer$ 9,863.01 debit the seller and credit the buyer$ 833.33 debit the seller and

credit the buyer$ 416.66 debit the seller and credit the buyer Take 20 apartments x $1250 =$25,000 x12 = $300,000.Divide by 365 = $821.92 x 12 days= $9,863.04. Make sure you charge the seller only for the days remaining in the month.The seller has collected the rent at the first of the month. The buyer will be paid rent from the owner for the days he owns the property.Paul sold the house for Joe. Paul earned a 7% commission and earned $5,600. What was the sale price?Divide $5,600 by 7%. The result is $80,000.

The Pickets are purchasing a home for $78,000 and the lender is giving them a 90% loan at 10% interest, plus a 2% loan origination fee. How much is the loan origination fee?a. $1,404b. $1,560c. $1,650d. $7,020 First determine loan balance. Take $78,000 (purchase price) x 90%= $70,200 loan balance. Then fill in the formula.70,200*2%=1,404 What is the 13th step of closing a sale? The buyer obtains hazard insurance and gets a copy of the policy to the closing agent. Flood insurance must be obtained if necessary What is the Statutory Month Method?360 day year rather than a 365 day yeardivide the item to be paid by 12, and then by 30 days to determine the daily rate When are things Prorated in Florida?In Florida, it is customary to have everything prorated as of midnight the night before closing.What is a Part?piece of something such as a commission is always part of the sales price.The seller has owned a property for 20 years and owes the lender $50,000 on the day of closing. The lender is charging a 1% prepayment penalty. What is the cost of the penalty?$50,000 X 1% = $500.Debit the seller only.The buyer is not involved in this charge.Where do settlement amounts start on the Closing Disclosure?Page 2 of the Form What is a Conditional Loan approval?meaning the lender has agreed to lend the money but certain conditions remain to be completed such as the sale of the previous house, or the taxes being brought up to date What are Services the borrower did shop for? These are items the borrower can get on his own, such as pest inspections, survey fees, and title insurance.What is included on the second section of the Closing Disclosure in Settlement costs?Other Costs What is 1 discount point equal to?one point (either discount or loan origination) is 1% of the loan balance What is the 7th step of closing a sale?An appraisal is done by a certified appraiser What is the Closing Disclosure?also referred to as a closing statement or a settlement formthe official settlement statement used by settlement agents and title companies to itemize all charges for a borrower and sellergives a picture of the closing transaction, and provides each party with a complete list of incoming and outgoing funds. "Buyers" are referred to as "borrowers" on this form even if no loan is involvedused for cash transactions by many settlement to show how the closing costs were calculated What are taxes rounded to?up to the nearest $100.00 What should you round to in real estate? 3 decimal places If the interest on a loan at 9% for 8 months was $5,400, then what was the amount of the loan?a. $67,500b.$72,900c. $81,000d. $90,000 First, determine how much the interest is annually by dividing $5400 by 8= $675 per month x 12= $8,100. Then put into the formula.$8,100/9%=$90,000

The sellers told their real estate agent they wanted to net $50,000.00 after paying a 6% commission. How much did the property have to sell for to net the seller $50,000.00?a) $50,000.00b) $51,500.00c) $53,000.00d) $53,191.49 100% - the 6% of commission= 94%By dividing $50,000 ÷ by 94%= answer is $53,191.49 John paid $10,000 for a lot. He sold it for $8,000. How much is percent of loss?$2000 loss divided by $10,000 original price = 20% loss Each year you pay $12,000 in interest on your loan at 7.5% interest. Your loan amount is?$12,000 divided by 7.5%=$160,000 loan When is the Conditional Loan approval changed? closing What is included in Transaction Information? Includes names and addresses for both the borrowers and sellers and the lender's name 30 days has September, April, June and November These months have 30 daysBesides Februarythe rest have 31 What is a whole?always the complete unit such as sale price or market value.What does other costs entail?E. Taxes and other government feesF. PrepaidsG. Initial escrow payment at closingH. Other costs not covered elsewhere on the disclosureI. The total of the costs of the 4 of those^^^^^ When is interest on a mortgage paid?In arrears The seller owes interest on his loan that he is going to pay off at the closing on June 10th. The amount of the loan is $150,345.00. His interest rate is 6%. How much interest will the seller owe on his loan?annualize whatever math you are working with. The seller owes $150,345.00 on his loan. The interest rate is 6%. The closing date is June 10th. How much interest does he owe?150,345*.06=$9,020.70 annual interest.Divide the annual by 365 days. This makes the cost per day $24.71Because it is interest, and not prorations, count all the days to closing = 10 x $24.71= $247.10

The T lines are:horizontal - divide line

What are accounting terms used to show placement of money?CreditDebit What is the 17th step of closing a sale? Buyer does a final walk through inspection The home is closing on March 22. The taxes, $2400, are in arrears* and need to be paid by the seller. All prorations should be figured by midnight the day before closing. What should be debited (charged) to the seller?Using the Statutory Month Method First determine the time period the seller owes. He will owe for 2 months and 21 days (all of January and all of February and part of March. In this method all months have thirty daysTaxes debited to the seller 2 months and 21 days = 200 monthly x2=$400 + 6.67 daily x 21= $140. $400

• $140 = $540 will be charged to the seller. Many closers

use this method since it is faster and easier to do than 365.A lender charged a borrower 3 discount points on a $50,000 loan. How much would be the charge for the discount points?

• points 3%$50,000 x 3%= $1500

When are Prorations calculated?midnight the day before closing What is the deed of the property tax based upon? Sale Price The seller wanted to net $150,000 after paying an 8% commission and closing expenses of $1500. How much