7B. Related Computations and Closing Transactions

1 Review answers below According to RESPA, what must the lender give to the borrower in the days immediately prior to settlement? Topic: Real Estate Related Computations and Closing of Transactions Subtopic: Closing Statements Closing Disclosure Freddie Mac borrower disclosure Loan Estimate The lender must give the borrower the Closing Disclosure three days prior to settlement.

A

15 If an agent in Fort Myers sells a home for $143,000, and their commission rate is 5%, what is the commission on the sale of this home? Topic: Real Estate Related Computations and Closing of Transactions Subtopic: Math - Computations $7,150 $7,500 $8,580 Commission = sales price x commission rate: $143,000 x .05 = $7,150.

A

18 Who closes on the mortgage loan commitment at closing? Topic: Real Estate Related Computations and Closing of Transactions Subtopic: Closing Statements The buyer and the lender's attorney The buyer and the seller The buyer and the title insurance rep The lender's attorney and the broker for the buyer The buyer and the lender's attorney close on the mortgage loan commitment at closing. The lender may or may not have a representative at the closing; if not, the mortgage documents will already have been signed by the lender.

A

20 At the closing table, who examines all documents for buyers and represents their best interests? Topic: Real Estate Related Computations and Closing of Transactions Subtopic: Closing Statements Buyer's attorney Escrow agent Lender's attorney Title insurance representative The buyer's attorney examines all documents for buyers or sellers and represents their best interests.

A

3 How is the documentary stamp tax on deeds calculated? Topic: Real Estate Related Computations and Closing of Transactions Subtopic: Math - Computations TIL Statement 70 cents per $100 of the purchase price 70% of the total original sales price paid by the seller Fixed percentage rate based on the price of the property at the time of the sale in 1970 The documentary stamp tax on deeds is calculated at a rate of 70 cents per $100 of the purchase price.

A

9 Which two items will appear on a closing disclosure? Topic: Real Estate Related Computations and Closing of Transactions Subtopic: Closing Statements Transfer tax Credits and debits Repair invoices and seller credits Seller net and buyer net Credits and debits appear on the closing disclosure.

A

10 On the Florida closing statement, what's the term for an amount that will show up in the party's favor? Topic: Real Estate Related Computations and Closing of Transactions Subtopic: Closing Statements Balance Credit Debit Mortgage A credit is an amount that shows up on the Closing Disclosure form in a party's favor.

B

12 The current value of a property in Pompano Beach is $105,000. What was the original cost of the property if there has been a 30% loss in value? Topic: Real Estate Related Computations and Closing of Transactions Subtopic: Math - Computations $105,000 $150,000 $31,500 $350,000 Take the current value of the property divided by the total depreciation: 100% 30% = 70%, then $105,000 ÷ 0.70.

B

13 What's a percent? Topic: Real Estate Related Computations and Closing of Transactions Subtopic: Math - Computations A fixed charge Part of 100 Something that is divided into a number of equal parts The loan amount A percent is part of 100. Two percent is two parts of 100.

B

14 We know that the original loan was for $17,000 with an interest rate of 9.5%. How much interest would be charged if the loan is paid off in 11 months? Topic: Real Estate Related Computations and Closing of Transactions Subtopic: Math - Computations $1,416 $1,480 $1,545 $1,615 First find the annual interest amount: $17,000 (principal) x 0.095 (interest rate as a decimal) = $1,615. Then divide by 12 to get the monthly rate, which is $134.58. Finally, multiply the monthly interest by 11: $134.58 x 11 = $1,480.42 which we can round down to $1,480.

B

8 A property in Fort Walton Beach sells for $200,599, which is 15% more than the owner paid eight years ago. What did the owner originally pay for the property? (Round to the nearest cent.) Topic: Real Estate Related Computations and Closing of Transactions Subtopic: Math - Computations $1,337,326.67 $174,433.91 $235,998.82 $30,089.85 Take the sale price of the property divided by the total profit: 100% + 15% = 115%, then $200,599 ÷ 1.15.

B

16 What is the calculation used to determine the estimated annual interest amount a borrower will pay on a loan? Topic: Real Estate Related Computations and Closing of Transactions Subtopic: Math - Computations Appraised value x interest rate Interest rate x months in loan term Loan balance x interest rate Sales price x interest rate To calculate the estimated annual interest on a loan, multiply the loan balance by the interest rate.

C

17 When does the seller's broker receive commission? Topic: Real Estate Related Computations and Closing of Transactions Subtopic: Closing Statements $9,440 After signing the representation agreement After the buyer puts an offer down on a property At or just after the closing At the final walk-through of a property The broker receives commission at or just after the closing. Licensee commissions are distributed by their brokers.

C

19 Which document provides an estimate of the costs a buyer is likely to pay at settlement before the closing? Topic: Real Estate Related Computations and Closing of Transactions Subtopic: Closing Statements Abstract of title Closing Estimate Loan Estimate The Loan Estimate provides buyers with the costs they are likely to pay at settlement and is closely related to the actual costs at closing on the closing disclosure.

C

4 A seller wants to break even after the broker's commission of 5% and loan balance of $300,000 are paid. At what price must the house sell? Topic: Real Estate Related Computations and Closing of Transactions Subtopic: Math - Computations $150,000 $300,000 $315,789 $450,000 In order to calculate this, start with 100% minus a 5% commission, which is 95% or .95. Take $300,000 and divide this amount by .95.

C

5 Which act prohibits the payment of kickbacks between settlement service providers? Topic: Real Estate Related Computations and Closing of Transactions Subtopic: Closing Statements Flat fee of $70 per $100,000 of the sales price MDIA RELA RESPA The Real Estate Settlement Procedures Act prohibits the payment of kickbacks between settlement service providers.

C

6 Which type of federally related lending transaction is covered under RESPA? Topic: Real Estate Related Computations and Closing of Transactions Subtopic: Closing Statements Foreclosure Industrial property loans Mortgages and home equity credit lines Retail property loans Mortgages and home equity credit lines are covered under RESPA.

C

11 RESPA prohibits kickbacks between which parties? Topic: Real Estate Related Computations and Closing of Transactions Subtopic: Closing Statements Construction contractors Fellow agents Referral parties Settlement service providers Title liens and buyer inspection items Settlement providers aren't allowed to receive kickbacks according to RESPA.

D

2 A(n) ______ fraction is where the numerator is less than the denominator. Topic: Real Estate Related Computations and Closing of Transactions Subtopic: Math - Computations Denominator Improper Numerator Proper A proper fraction is one in which the numerator is less than the denominator. For instance, 4/5 is a proper fraction, whereas 3/1 would be an improper fraction because the numerator (3) is more than the denominator (1).

D

7 Which term is defined as a tax that's applied when property changes ownership? Topic: Real Estate Related Computations and Closing of Transactions Subtopic: Math - Computations SEQRA Income tax Property tax Sales tax A transfer tax is applied when property changes or transfers ownership from one person to another.

D