POR texas 2 unit 10
Brad is selling his home to Sally with a closing date of January 31. Brad's taxes for the last year were $3,756.75. How much is Sally's share of the taxes, using a 360-day-year statutory proration?
$3,443.69. Using the 360-day year, divide $3,756.75 by 360, then multiply by 330 for $3,443.69 rounded to the nearest cent.
Brad is selling his home to Sally with a closing date of January 30. Brad's taxes for the last year were $3,756.75. How much is Brad's share of the taxes, using a 360-day-year statutory proration?
$313.06. Using the 360-day year, divide $3,756.75 by 360, then multiply by 30 for $313.0625, rounded up to $313.06.
Brad is selling his home to Sally with a closing date of January 31. Brad's taxes for the last year were $3,756.75. How much is Brad's share of the taxes, using a 365-day-year proration?
$319.07. Using the 365-day year, divide $3,756.75 by 365, then multiply by 31 for $319.07.
Buyer Betsy is assuming seller Samuel's existing loan. Who pays the assumption fee?
Betsy. If the buyer assumes the seller's existing loan, an assumption fee will be charged to the buyer.
Which of the following would a lender generally NOT require to be produced at or before the closing?
Homestead declaration
Which of the following best describes the purpose of RESPA?
To protect consumers from abusive lending practices
Sally's real estate broker is checking the closing cost figures on the Closing Disclosure before delivering it to Sally to review before closing. Among other things, the broker is checking to see that unpaid accrued real estate taxes are
a credit to the buyer and a debit to the seller. On the day of closing, accrued real estate taxes are a debit (charge) to the seller, prorated through the day of closing. The buyer will then be credited the same amount. To cover the seller's portion of this year's tax bill, the escrow agent will transfer those funds to the buyer's lender for deposit into the buyer's new escrow account. The servicer for the buyer's loan will pay the entire year's taxes at the end of the year.
Earnest money is reflected on the Closing Disclosure as
a credit to the buyer. In almost all instances, a buyer pays an earnest money deposit at the time the purchase contract is negotiated. At closing, the buyer receives a credit for the money that she has paid.
When Thomas inspects the Closing Disclosure before closing on the new home he is purchasing, he notes that the sales price of the property is listed as
a credit to the seller and a debit to the buyer. The sales price is a debit (charge) to the buyer and thus a credit (an amount being received) to the seller.
Which of the following would be considered "prepaid" items that a buyer should compensate a seller for at closing?
annual homeowner association dues; lawn service contract. Prepaid items are anything that was paid in full up front but will carry forward even after the seller leaves. There is no similar buyer commitment to items such as newspaper delivery and school donations.
The real estate sales agent's presence at the closing can BEST be described as
being available for questions, locating missing documents, handling emergency issues.
Buyer Betty is assuming seller Sal's existing mortgage. The unpaid principal balance of the assumed loan shows as
both a credit to the buyer and a debit to the seller. Because Betty will be assuming the existing mortgage, she will be paying that amount after closing. Also, it shows as a debit to the seller because the seller must pay it off at closing.
Which is permitted between brokers according to the RESPA prohibition against kickbacks?
commission splitting. Commission splitting between brokers is allowed. RESPA (Real Estate Settlement Procedures Act) prohibits kickbacks, or unearned fees, given for referrals for settlement services including those related to mortgage loans, title searches, title insurance, surveys, credit reports, appraisals, and services rendered by attorneys. Fee splitting among cooperating brokers or members of MLSs, brokerage referral arrangements, the division of a commission between brokers and their salespeople, and referrals made by an employee to generate business for the company itself are not prohibited by RESPA.
Under the TRID Rule, what is the difference between consummation and closing?
consummation is the date the borrower becomes contractually obligated to the lender and closing is the date the buyer becomes contractually obligated to the seller in a real estate transaction. "Consummation" is not the same as "closing" or "settlement" although they can happen at the same time. Consummation is the date the borrower signs the note and becomes contractually obligated to the lender-creditor on the loan. Closing or settlement occurs when the borrower-buyer becomes contractually obligated to the seller in a real estate transaction.
What are accrued items at closing?
expenses that are owed by the seller but will later be paid by the buyer
The Real Estate Settlement Procedures Act was first enacted as
federal law
Buyer Barbara is purchasing a home from seller Sandra. Barbara's lender offers discount points to buy down the interest rate. Who is always responsible for payment of the discount points?
it's negotiable. The lender may also charge discount points, the payment of which is negotiated between the buyer and the seller on the sales contract.
RESPA covers real estate transactions financed using
new residential first-mortgage loans. RESPA applies to all federally related mortgage loans except (1) a loan for business, commercial, or agricultural purposes; (2) a loan on property of 25 acres or more; (3) a temporary construction loan; (4) a loan on vacant land; (5) assumption without lender approval; (6) a conversion of a federally related mortgage loan to different terms, if a new note is not required; and (7) transfer of a loan in the secondary market.
Seller Bob has an existing mortgage on the house he is selling to buyer Billie that will be paid off at closing. The closing agent must do which of the following?
obtain payoff information before closing, withhold the money from the seller's proceeds, pay the escrowed money to the lienholder, and get a release.
How is rent usually prorated for purposes of closing?
on the actual number of days in the month of closing
Once payments begin after closing, the borrower cannot be required to pay more than
one-twelfth of the annual taxes and insurance premium in each month
The Closing Disclosure must be used to illustrate all settlement charges for
residential transactions financed by federally related mortgage loans.
Who is usually responsible for fees to prove good title?
seller
When is the earliest that a home purchase transaction can close?
seven business days after the lender delivers the Loan Estimate to the homebuyer. The waiting period begins when the lender places the Loan Estimate in the mail.
Agent Allen wants to ensure that the sale of seller Louise's house to buyer Bennie will close without a problem. Which of the following is NOT an issue for Louise?
that Bennie will lease the property at closing to tenants. Because the seller's main interest is in receiving payment for the property, the seller will want to be sure that the buyer has obtained the necessary financing and has sufficient funds to complete the sale. The seller will also want to be certain that he has complied with all the buyer's inspection and repair requirements so that the transaction can be completed. It is not relevant what Bennie will do with the property after closing.
The document that provides borrowers with general information about the application and closing process, and worksheets and checklists to aid the buyer is
the booklet Your Home Loan Toolkit: A Step-By-Step Guide.
Attorney's fees for the preparation of the deed of trust are paid by
the buyer. In most cases, the buyer pays for the preparation of the note and deed of trust; the seller pays for the preparation of the deed and release of lien (if applicable).
Security deposits should be listed on a closing statement as a credit to
the buyer. The buyer will need these deposits to use for repairs or to return to the tenants when the tenants' leases terminate. They are generally not prorated and are credited in total to the buyer and debited to the seller.
Who typically pays for recording fees to record the deed and deed of trust?
the buyer. The purchaser usually pays for recording charges that arise from the actual transfer of the title—the deed and the deed of trust or mortgage.
Buyer John wants to ensure that seller Linda can deliver good title at closing. Review of which of the following documents is NOT part of the process?
the inspection report. The commitment, the seller's deed, and the survey will all provide useful information before closing regarding possible title issues. The inspection report notifies the buyer of any potential structural defects.
All encumbrances and liens shown on the title commitment, other than those waived or agreed to by the purchaser and listed in the contract, must be removed so that the title can be delivered free and clear. The removal of such encumbrances is the duty of
the seller
Who owns the home on the day of closing?
the seller owns the home until the end of day and is responsible for all expenses until the end of the day. The seller pays expenses (and is entitled to rental income) through the day of close.
Who is responsible for payment of attorney's fees for preparation of the deed?
the seller. In most cases, attorney fees are charged to the seller for the preparation of the deed and a release of lien (if the seller's note is being paid off at closing or the buyer is assuming liability for the note).
Len and Mary are preparing to go to closing at the title company. Their real estate broker mentioned the "good funds rule." How does that relate to their closing?
they must take a cashier's check, certified check, or wired funds to closing if the amount due at closing is $1,500 or more. There are several advantages to closing a sale in escrow: The buyer's money will not be paid to the seller until the seller's title is acceptable. The seller is assured of getting the purchase price because the buyer's check must clear before title passes. Neither party need be present when title is passed.
When must the Closing Disclosure be provided to the borrower-buyer?
three days before consummation of the loan
A transaction is to be closed in escrow. The seller should expect to deposit all of the following items with the escrow agent before the closing date
title evidence. deed to the property. payoff letter.
What is one of the purposes of a survey in a real estate transaction?
to show existing easements and improvements on the property
In the sale of rental properties, how are staff wages prorated?
unpaid wages are prorated if the sale closes between payment dates. The seller owns the property until the close, and therefore is beholden to the employees, while the buyer assumes that responsibility the day following the close.
Who pays the appraisal fee on the property?
usually the buyer pays for the appraisal, but that payment can be the subject of negotiation between the buyer and the seller.
