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24 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Fact. Good funds are defined as. |
Wire transfer, cashiers check, or tellers check |
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Fact. The four parties involved, each with separate obligations in the closing process |
1.) The seller 2.) The buyer 3.) The broker 4.) The closing company |
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Fact. The four most typical ways to close a real estate purchase are. |
1.) Cash 2.) Assumable Loan 3.) Seller Carry 4.) New Loan |
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Fact: Overall responsibility for properly accounting at closing belongs to the listing brokerage and the listing broker. |
Fact: Overall responsibility for properly accounting at closing belongs to the listing brokerage and the listing broker. |
Fact: Overall responsibility for properly accounting at closing belongs to the listing brokerage and the listing broker.
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Fact: Closing requires three parties. |
1) Seller 2) Buyer 3) Closing entity/company |
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Seller Debits |
Items that reduce the amount of cash the seller receives at closing |
1) Owner's title insurance |
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FACT. All loans are always a CREDIT to the buyer. |
FACT. All loans are always a CREDIT to the buyer. |
FACT. All loans are always a CREDIT to the buyer. |
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Fact: Property Taxes - Paid in arrears |
1 lump sum due by April 30th or 1st half due by last day of February and 2nd half due by June 15th |
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Fact. If both parties agree, special assessments could be assumed by the buyer and will not show up on the Closing Statements. |
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A property has two special assessments. One for $263.00 that the seller has agreed to pay and another for $72.46 that buyer has agreed to assume. How should you handle the special assessments? |
debit seller, credit broker. The seller will be debited for the one they agreed to pay. The buyer’s side, $72.46, will be paid outside and after closing (debit seller; credit broker to pay the bill). |
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The broker credit total column is a combination of credits for bills paid and the amount of the check due the seller. |
The broker credit (check paid) column represents credits for bills the broker will pay and the amount of the check for the seller. |
The broker credit total column is a combination of credits for bills paid and the amount of the check due the seller. |
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At closing, the designated broker for each party is responsible for the Closing Statement for the party represented. So while the listing brokerage and listing broker are responsible for the overall closing and the seller’s Closing Statement, the designated buyer’s broker is responsible for the buyer’s Closing Statement. |
At closing, the designated broker for each party is responsible for the Closing Statement for the party represented. So while the listing brokerage and listing broker are responsible for the overall closing and the seller’s Closing Statement, the designated buyer’s broker is responsible for the buyer’s Closing Statement. |
At closing, the designated broker for each party is responsible for the Closing Statement for the party represented. So while the listing brokerage and listing broker are responsible for the overall closing and the seller’s Closing Statement, the designated buyer’s broker is responsible for the buyer’s Closing Statement. |
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In a new loan closing, all items related to the loan itself are single entry. Because loans are always a buyer credit, it is entered that way only. |
In a new loan closing, all items related to the loan itself are single entry. Because loans are always a buyer credit, it is entered that way only. |
In a new loan closing, all items related to the loan itself are single entry. Because loans are always a buyer credit, it is entered that way only. |
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A flat-rate water bill that is paid in advance in the amount of $37.50 for the month has not been paid. For a closing on June 16, which is a correct entry for the settlement statements? |
Debit Buyer, Debit Seller, Credit Broker. The water is a lien at closing, but the seller only owes for the seller portion of the month, and the buyer will be required to pay the buyer portion. The combined amount is the total amount due, which will be a credit to the broker, who will write a check to clear the lien. |
Debit Buyer, Debit Seller, Credit Broker.The water is a lien at closing, but the seller only owes for the seller portion of the month, and the buyer will be required to pay the buyer portion. The combined amount is the total amount due, which will be a credit to the broker, who will write a check to clear the lien. |
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Debit entries in the broker column represent Deposit; Checks = Credits. |
Debit entries in the broker column represent Deposit; Checks = Credits. |
Debit entries in the broker column represent Deposit; Checks = Credits. |
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Remember. |
Remember. A nonresident seller of an income property over $100,000 would be charged 2 percent of the sales price. |
Remember. A nonresident seller of an income property over $100,000 would be charged 2 percent of the sales price. |
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Don't forget. In a new loan closing, the settlement worksheet will show an entry for tax reserve that indicates the new lender is collecting this amount to start the reserve for the buyer’s next tax payment. |
Don't forget.In a new loan closing, the settlement worksheet will show an entry for tax reserve that indicates the new lender is collecting this amount to start the reserve for the buyer’s next tax payment. |
Don't forget.In a new loan closing, the settlement worksheet will show an entry for tax reserve that indicates the new lender is collecting this amount to start the reserve for the buyer’s next tax payment. |
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Fact. In a new loan closing, the net loan proceeds is entered on the settlement worksheet as debit broker, single entry. |
Fact. In a new loan closing, the net loan proceeds is entered on the settlement worksheet as debit broker, single entry. |
Fact. In a new loan closing, the net loan proceeds is entered on the settlement worksheet as debit broker, single entry. |
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Remember. In a new loan, the seller pays off (releases) the deed of trust for the current loan. This is a single-entry debit to the seller who must pay off the deed trust to give the buyer clear title. |
Remember.In a new loan, the seller pays off (releases) the deed of trust for the current loan. This is a single-entry debit to the seller who must pay off the deed trust to give the buyer clear title. |
Remember.In a new loan, the seller pays off (releases) the deed of trust for the current loan. This is a single-entry debit to the seller who must pay off the deed trust to give the buyer clear title. |
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A loan of $150,000 has an interest rate of 6 percent and is being assumed at a closing on June 15. What is the worksheet entry for the prorated interest? |
Interest proration for the month of June = $150,000 × .06 ÷ 12 = $750.00 interest for JuneThe buyer is assuming the loan, so the buyer will make the next mortgage payment. Because mortgages are paid in arrears, the buyer should not be forced to pay a seller’s bill. The seller owned for the first 14 days so they owe that portion of the interest. (Assumed interest = Debit seller – Credit buyer)Interest for the month of January = $150,000 × .06 ÷ 12 = $750.00 interest for June. $750 (divided by 30 days in June multiplied by 14 days which the seller owes buyer, equals $350. Debit seller $350 / Credit Buyer $350 |
Interest proration for the month of June = $150,000 × .06 ÷ 12 = $750.00 interest for JuneThe buyer is assuming the loan, so the buyer will make the next mortgage payment. Because mortgages are paid in arrears, the buyer should not be forced to pay a seller’s bill. The seller owned for the first 14 days so they owe that portion of the interest. (Assumed interest = Debit seller – Credit buyer)Interest for the month of January = $150,000 × .06 ÷ 12 = $750.00 interest for June. $750 (divided by 30 days in June multiplied by 14 days which the seller owes buyer, equals $350.Debit seller $350 / Credit Buyer $350 |
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Fact. A deed of trust is created as security for a lender. In a seller-carry situation, the seller is literally loaning equity to the buyer. At closing, the money is taken from the seller (debit) and loaned to the buyer (credit). |
Fact. A deed of trust is created as security for a lender. In a seller-carry situation, the seller is literally loaning equity to the buyer. At closing, the money is taken from the seller (debit) and loaned to the buyer (credit). |
Fact. A deed of trust is created as security for a lender. In a seller-carry situation, the seller is literally loaning equity to the buyer. At closing, the money is taken from the seller (debit) and loaned to the buyer (credit). |
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Fact. Notary fees are paid by the person whose signature is being notarized. The grantor/seller signs the warranty deed so the seller will be charged for this cost. |
Fact.Notary fees are paid by the person whose signature is being notarized. The grantor/seller signs the warranty deed so the seller will be charged for this cost. |
Fact.Notary fees are paid by the person whose signature is being notarized. The grantor/seller signs the warranty deed so the seller will be charged for this cost. |
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If a mortgagee’s title policy for $225 is required, how will the settlement worksheet reflect these items? |
In a new loan, the buyer is responsible for paying for the mortgagee’s policy. The bill will be paid from the gross loan, so the entry is a debit only for the buyer. |
In a new loan, the buyer is responsible for paying for the mortgagee’s policy. The bill will be paid from the gross loan, so the entry is a debit only for the buyer. |
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If the new loan amount is $70,330 and the total lender payouts are $35,326, the net loan proceeds are $35,004.00 (debit broker, single entry) |
If the new loan amount is $70,330 and the total lender payouts are $35,326, the net loan proceeds are $35,004.00 (debit broker, single entry) |
If the new loan amount is $70,330 and the total lender payouts are $35,326, the net loan proceeds are $35,004.00 (debit broker, single entry) |
