Real Estate Calculations Flashcards

Real Estate Calculations Flashcards When the Franks bought their first home, some of their costs included payment of points, establishment of an escrow account, premium for title insurance, and commission to their own buyers' agent. On that year's income tax return, they may deduct the Points paid for a purchase money mortgage on one's own home are immediately deductible as prepaid interest.The annual real estate taxes on a property are $2,400. The seller pays taxes in arrears in two installments, on June 1 and October 1. If the closing is scheduled for August 28, what taxes will be due and how will the information appear on the HUD 1?

$2,400 ÷ 2 = $1,200; $2,400 ÷ 12 = $200; $2,400 ÷ 36 =

$7; half year at $1,200 + 7 months at $200 = $1,400; 28 days at $7 = $196, for a total of $2,796 to be credited to buyer and debited to seller on the HUD 1.The Owens are buying a $100,000 house with 5% down and an FHA mortgage for the rest. They must pay an upfront MIP of 2.5% in addition to other closing costs that amount to $1,000. How much money will they need at the closing?The Owens will pay at closing a total of $5,000 down payment ($100,000 × 5%) + $1,000 closing costs + $2,375 in mortgage insurance premiums (2.5% of $95,000 mortgage), which adds up to $8,375.A borrower must pay $5,600 for points on a $140,000 loan.How many points is the lender charging for this loan?Divide the dollar amount of the discount points by the loan amount. $5,600 divided by $140,000 = .04, or 4 points. 1 point = 1% of the loan amount.A charge of 2.5 discount points on a $178,000 loan equalsConvert the discount points to a percentage, then multiply by the loan amount. $178,000 × .025 = $4,450. 1 point = 1% of the loan amount.