real estate math

Area

Area is always expressed in square feet or square yards: Area of a rectangle: Area = length x width Area of a square: Area = side x side Using the formulas above, the area of a rectangular lot that measures 150 feet wide by 200 feet deep would be 30,000 square feet. 150' X 200' = 30,000 square feet The area of a square lot that measures 120 feet wide and 120 feet deep would be 14,400 square feet. 120' X 120' =14,400 square feet The front foot of a parcel of property is the measure of the property's frontage on the road or highway or across the front of the property (the width). If the front footage represents a substantial part of the parcel's value - for example an ocean-side property - the property may be priced per front foot. In such a situation, the area that extends back from the ocean is left out of the calculation. For example, if a rectangular lot measuring 800 feet wide by 200 feet deep is offered for $20 per front foot, the asking price would be $16,000. 800' X $20 = $16,000 End of Page CHAPTER START

Area of a triangle

Area of a triangle: Area = ½ base x height The base of the triangle is the bottom and the height is an imaginary line from the top of the uppermost angle to the base. If the base of a triangle is 100 feet and the height is 50 feet, the area is 2,500 square feet. ½ (100' X 50') = area ½ (5000') = 2,500 square feet

Simple Interest Formula

I=prt

Point Calculations

Mark and Amy are getting a $120,000 loan at 8.5 percent and will pay 2 origination points at closing. What will the point cost be and what will the effective interest rate be? Point cost: $2,400 $120,000 x .01 x 2 points Effective interest rate: 8.5 percent (Origination points do not change the effective rate of the interest.) But what if the lender were charging 2 discount points instead of origination points? How would that change the figures? The calculation for the point amount remains the same. Point cost: $2,400 $120,000 x .01 x 2 points But now let's look at how the rate changes. 2 points x 1/8 percent = 2/8 = .25 percent 8.5 + .25 = 8.75 percent effective rate

Area and perimeter of a rectangle

Once you figure out the total square footage of a home or parcel, you can compute the price per square foot by dividing the sales price of the home or land by the calculated area. Example: A parcel of land that is 150 feet wide and 100 feet deep and sold for $140,000 has a price per square foot of $9.34. 150 X 100 = 15,000 square feet $140,000 ÷ 15,000 = $9.34 per square foot Perimeter The perimeter of a lot or other shape is the sum of the length of all its sides.

Points

Points are items usually included in the cost of obtaining a new real estate loan. Points are a one-time service charge to the borrower for making the loan. There are two types of points: Origination points Discount points Points represent prepaid interest, and the lender charges them to get additional income on the loan. Points are paid at closing and are usually equal to 1 percent of the loan amount. Two (2) points on a $75,000 loan would be $1,500. ($75,000 x .01 x 2 points)

Rectangular lot 190 feet wide by 150 feet deep. Square lot 90 feet on each side. Triangular lot 120 feet wide (base) and 60 feet deep (height).

Rectangular lot 190 X 150 = 28,500 square feet Square lot 90 X 90 = 8,100 square feet Triangular lot ½ (120 X 60)½ (7,200) = 3,600 square feet

Origination Points

Similar to origination fees that are collected from the buyer as a means of paying for the loan application process

Discount Points

These charges are designed to offset any losses the lender might suffer when selling the loan to the secondary mortgage market. Discount points are a means of raising the effective interest rate of the loan. The rule of thumb is 1/8 percent for each discount point. So a charge of 4 points would increase a 7.25 percent mortgage to a 7.75 percent yield. 4 points x 1/8 percent = 4/8 = .50 percent 7.25 + .50 = 7.75 percent

Irregular Lots or Rooms

To compute the area of an irregular parcel or room, you will have to follow this procedure: Divide the shape into regular rectangles, squares or triangles. Compute the area for each figure. Add the areas together to get the total area for the parcel. For example, let's say a lot is irregularly shaped and looks like this: 1. Divide the parcel to look like this. 2. Compute the area for each figure. 90 X 80 = 7,200 square feet½ (80 X 35) = ½ (2,800) = 1,400 square feet 3. Add the square feet together to get the total. 7,200 + 1,400 = 8,60

Discount Points

used to lower the mortgage interest rate,Discount points are a means of raising the effective interest rate of the loan.