Real Estate Calculations

Seller Adelaide and buyer Colin close on a transaction for two rental condos on March 15. They live in a state where the seller is considered the owner of the property on the day of closing. The combined rental income per month is $4,000. How much rental income can Colin expect to earn in March?

$2,064.48 In many states, the seller is considered the property owner on closing date. Divide the monthly income by the days in March ($4,000 ÷ 31 = $129.03) for daily rent, then multiply that by the 16 days Colin will own the property for the total of $2064.48.

Bob and Mary are financing $180,500 for a new home. Their lender will approve an interest rate of 5% if Bob and Mary pay two discount points at closing. How much will this cost them?

$3,610

The lender will charge a one-and-a-half-point origination fee and two loan discount points. What will be the total due for points on a $115,000 loan?

$4,025

Grant and Adela arrange a $150,000 loan at 4.5% annual interest with their lender. What's their monthly interest amount?

$562.50

A buyer is securing a home loan for $500,000. The state mortgage recording tax rate is $0.115 per $100. What's the mortgage recording tax?

$575

A buyer is purchasing a property for $500,000. He has a down payment of $50,000 and is financing the rest. What's the amount of the loan origination fee if the lender charges one-and-a-half points?

$6,750

You're working with a buyer who's purchasing a home that appraised at $80,000. The buyer is obtaining a 90% loan, and the lender will charge a one-point origination fee at closing. How much will the loan origination fee be?

$720

Gary has an 80% LTVR on his new $318,000 townhome with an annual interest rate of 4.125%. What's his interest payment the first month?

$874.50

A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly mortgage payment of $2,042.71. Assuming he pays taxes and insurance separately, if $1,145.83 of his payment is interest, how much is applied to the loan's principal?

$896.88 Monthly payment - interest paid = principal amount paid. If $1,145.83 of the total payment is interest, that leaves $896.88 to be applied to the principal ($2,042.71 - $1,145.83 = $896.88).

The Gatlins' lender tells them they can afford a monthly payment of $1,830 on their new home loan. What interest rate are the Gatlins getting if this is an interest-only loan with a principal balance of $349,000?

6.29% Annual payment ÷ loan balance = interest rate. $1,830 x 12 to get the annual payment of $21,960. Then divide the annual payment by the loan amount: $21, 960 ÷ $349,000 = .0629, or 6.29%.

Jared has a 70/30 split with his brokerage firm, and his firm has a 50/50 split with cooperating brokerages. Last month, he was paid $12,239.50 in commissions from his home sales, which totaled $538,000. What is the brokerage's commission rate?

6.5% Jared was paid $12,239.50, which is 70% of the amount paid to his broker as commission. That makes his firm's commission $12,239.50 ÷ .70 = $17,485. Multiply that by two for the total commission the firm grossed, since it's shared 50/50 with a cooperating brokerage (the brokerage that brings the buyer to the sale), giving you $34,970. Then divide by the total sales amount for the brokerage's commission rate: $34,970 ÷ $538,000 = 0.065, or 6.5%.

Shelly is a property manager. Her commission is a percentage of the rents she collects every month. Last month, she collected $78,450, and her commission was $5,491.50. What's her commission rate?

7%

Julio's lender presents him with a loan for $275,000 for 30 years at a 4.75% interest rate. How many discount points does Julio need to pay upfront to lower the interest rate to 4%?

Lowering the interest three quarters of 1% requires three points, since each point is worth one quarter of 1%.

Juan secures a fixed rate amortized 30-year loan for $295,000 at 4.25%. If his monthly P&I payment is $1,750, how much interest does he pay in the second month of the loan?

$1,042.29 In the first month, Juan pays $1,044.79 in interest ([$295,000 x .0425] ÷ 12). His monthly payment (stated in the question) is $1,750, so that means he paid the principal down $705.21 ($1,750 - $1,044.79). His new principal balance is $294,294.79 ($295,000 - $705.21). We use the new principal balance amount to calculate interest for the next month. Juan pays $1,042.29 in interest ([$294,294.79 x .0425] ÷ 12).

Your client Faye is buying a condo downtown for $565,000 and financing 60% of the purchase. Her lender is charging a one-point loan origination fee and two discount points. Can you help Faye calculate the dollar amount for points she's going to pay on her loan?

$10,170

Michael paid $385,000 for his home, which now has an assessed value of $392,000. His tax rate is 0.51%. How much with his monthly taxes be?

$166.60

Helen is purchasing a home for $150,000 and provides a $2,500 earnest money check to the seller. Her closing costs and down payment total $4,800. How much should Helen bring to the closing?

$2,300 Helen must bring $2,300 to closing to pay the total amount due. She owed a total of $4,800 minus the earnest money she provided when the contract was signed, $2,500, which left the amount still owed of $2,300.

A buyer is purchasing a property for $400,000. His loan-to-value ratio is 80%. The lender also charges a one-point loan origination fee. How much is the loan origination fee?

$3,200

Your buyer client, Max, just signed a purchase agreement for a $520,000 home. He has a 60% LTV ratio, and his lender's charging a 1.5% loan origination fee. What loan origination fee can Max expect to pay at closing?

$4,680

Alistair bought a townhouse for $285,900. He got a 90% loan and the lender charged him 3-1/2 discount points. How much did Alistair pay in discount points?

$9,005.85

Jane is purchasing a property for $310,000 and plans to finance $250,000. What is the loan-to-value ratio? (Round to the nearest percentage.)

81%

To which of the following are most of the buyer's closing costs typically related?

The mortgage loan the buyer's obtaining

A borrower has a 30-year, $500,000 loan with an interest rate of 6.25%. His monthly principal and interest payment is $3,078.59. What's the total amount he'll pay back over the life of the loan?

$1,108,292.40

A buyer with a 20-year, $419,000 loan at a 4.25% interest rate has a monthly principal and interest payment totaling $2,594.59. If $1,483.95 is interest, how much is applied toward principal each month?

$1,110.64

Stu's seller client, Gabi, wants to figure out how much equity she has in the home she's selling. Gabi paid $200,000 eight years ago and made several great renovations over the years. She still owes $125,000. Stu calculates that comparable home values in her area have risen about 15% since Gabi bought. Assuming Stu pulled appropriate comps, about how much equity does she have?

$105,000

Your seller wants to net $100,000 after the 5% commission is paid. Assuming no closing costs, at what price does the home need to sell for the seller to net this amount?

$105,263.16

Hal sold his client's listing for $230,000, but it only appraised at $200,000. The buyers were able to bridge that gap by putting the extra $30,000 down. What will Hal's 5% commission be?

$11,500 Hal's commission will be the sales price × his commission rate. So in this case, $230,000 × (.05) 5% = $11,500.

Edric owes $115,000 on his lakefront home, which he's selling for $350,000. He's spent $73,000 in major renovations, and he wants to take that expense into consideration when he calculates how much he'll actually pocket at closing. What number does he come up with?

$162,000

Cheryl and Roberto just signed a contract for Cheryl to buy Roberto's house for $235,000. Roberto owes $48,750 on his current mortgage, he's going to replace the old furnace ($800), he's agreed to pay 3% toward closing costs, and he'll pay a 6% commission to his agent. How much in whole dollars will he have left to put down on the condo he wants to buy?

$164,300

Helen is purchasing a home for $150,000 and provides a $2,500 earnest money check to the seller. She's financing the transaction, and her closing costs and down payment total $4,800. How much should Helen bring to the closing?

$2,300

Your clients are purchasing a $160,000 home. If they have a down payment of 25% and the bank charges two points at closing, how much are they paying in points?

$2,400

A buyer with a $242,000 loan has a monthly principal and interest payment of $1,317.66. If $1,033.54 is interest, what's the new principal balance after the first payment is applied?

$241,715.88

Joaquin sold his house for $327,600. He bought it several years ago for $139,900 with a $100,000 loan. The loan balance when he sold it was $73,400. What was Joaquin's equity?

$254,200 Joaquin's equity was $254,200. Subtract the loan balance from the market value of the home to find the equity ($327,600 - $73,400).

Henry submits an offer on a condo and includes an earnest money check for 10% of his offer, which the seller accepts. Later on at closing, he brings a cashier's check for $34,450 (comprising the remaining half of his 20% down payment and $7,950 in closing costs). What's the condo's purchase price in whole dollars?

$265,000

A seller wants to net $10,000 after the broker's commission of 6% and a loan balance of $250,000 are paid. For how much does the property need to sell?

$276,596 The property will need to sell for $276,596 for the sellers to net $10,000 after paying what they still own on the loan and the commission fee to the broker. To calculate this, start with 100% minus a 6% commission, which is 94% (.94). Then take the loan balance of $250,000 plus the $10,000 they want to net ($260,000) and divide this amount by .94 ($260,000 ÷ .94 = $276,596).

The daily property tax rate is $1.23 and closing is August 31. Assuming the buyer owns the property on closing day, and the seller hasn't made any payments, what will the seller owe at closing using the calendar year proration method? Round to the nearest whole dollar.

$298

A property's daily tax rate is $1.23 and closing is August 31. Assuming the buyer owns the property on closing day, and the seller hasn't made any payments, what will the seller owe at closing using the calendar year proration method? Round to the nearest whole dollar.

$298 The seller owes $298. The seller owned the property for 242 days of the year, and 242 x $1.23 = $297.66, or $298 if rounded to the nearest whole dollar.

A buyer is purchasing a property for $400,000. His lender's loan-to-value ratio is 80%. How much is the buyer financing?

$320,000

Almanzo is buying a horse farm for $695,000 and put down 15% in earnest money. His closing costs and down payment total $139,000. How much will he need to bring to closing?

$34,750

Hamish makes an offer on a loft in the city for $424,900 with a 10% earnest money deposit. The seller agrees, so Hamish secures an 80% loan. He needs to set aside funds for the mortgage tax as part of his closing costs. The rate in his area is $0.115 per $100. Calculate the mortgage tax Hamish will pay.

$390.91

Dale and Barbara, your buyer clients, aren't thrilled about the current interest rates on home loans. They opt to pay two discount points to their lender to bring down their monthly payment. They're financing $235,000 on their new $400,000 home, so how much can they expect to pay for points at closing?

$4,700

A local buyer is purchasing a property for $120,000. What will the seller pay in transfer tax if the rate is $.37 per $100?

$444 The seller will pay $444 in transfer tax. Multiply the transfer tax rate .0037 ($0.37 per $100) by the value of the property ($120,000). Remember that if you see a transfer tax rate that's "per $1,000" on your exam, you'd need to move the decimal point three spots to the left.

The Walton family got a great deal on their new home. They bought it for $101,295, and it appraised at $187,000. Using an assessment ratio of 25%, what is the assessed value of their new home?

$46,750 The assessed value is based on the appraised value of the home. So while the amount their home appraised for was significantly higher than what they bought it for, they'll only be taxed on 25% of it. In this case, $187,000 × 0.25 = $46,750.

Grant and Adela arrange a $150,000 loan at 4.5% annual interest with their lender. What's their monthly interest amount?

$562.50 Grant and Adela's annual interest amount is $6,750 ($150,000 x 0.045). To get the monthly amount, divide $6,750 by 12. Their monthly interest amount is $562.50.

Alison and Brent are financing their house purchase of $232,500 with an FHA loan. Their credit score qualifies them for the minimum down payment. What do they need to put down?

$8,137.50

Yasmin listed a house at a 6% commission rate, and it just sold for $463,500. Her brokerage and the buyer's agent's brokerage split the commission equally between them. Then Yasmin, who has a 60/40 commission split with her broker (Yasmin gets the higher split), took her check to the bank. How much did Yasmin earn from this transaction?

$8,343

Gabe's home has an assessed value of $172,000, and his tax rate is .55%. What are the annual taxes?

$946