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25 Cards in this Set
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Chap 16 ques 1
If the seller renewed hazard insurance for one year starting on 5/15, and the closing is on November 5th: A: Seller will be credited 190 days B: seller will be debited 174 days C: seller will be debited 190 days D: seller will be credited 174 days |
A: seller will be credited 190
===================== Since the seller paid for one year starting on 5/15 and he will no longer occupy the propery after closing on 11/5, The seller is responsible for the day if so calculations start the day after. The remainder of the premium will be refunded to him. In this case the remainder is: 25 days nov 31 day dec 31 days in jan 28 days in feb 31 days in march 30 days in april 14 days in may ---------------- 190 days |
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Chap 16 ques 2
If the hazard insurance premium for a 2 year period is $397.00 the approximate daily rate will be: A: 1.08 B .50 C .54 D 16.50 |
C: $0.54
==================== Hazard insurance is calculated yearly for 365 days, since this is a two year amount you need to 1st multiply 365*2 = 730 Next divide the total by the number of days 397/730=$0.54 |
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Chap 16 ques 3
When a closing is taking place on sept 10th the buyers first monthy payment will probably be due on: A: October 1st B: November 1st C: October 10th D: September 10th |
B:Nov 1st
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Chap 16 ques 4
If the sellers existing loan is for $95,000 at 10% and the payment due date is the 1st of the month. at a closing to take place on the 25th. the seller will owe interest of approximately: A: $659.72 B: $ 79.00 C: $ 26.25 D: $9500.00 |
A: $659.72
==================== Step 1 - Claculate yearly interest $95000.00*10%=$9500 / year Step 2 - calculate daily int $9500/360 (int is 360 days( = $26.38 Closing is on the 25th, therefore the seller will need to pay 25 days interst Step 3 mult # days by daily int 25* $26.38=$659.72 |
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Chap 16 ques 5
A borrower is obtaining a 90% loan with a sales price of $125,000, and closing is 2/25. If the seller is paying 2% PMI in cash at closing the approximate amout will be: A: $2258 B: $2259 C: $2500 D $2250 |
D: 2250
==================== Step 1 - figure the loan amount $125,000*90% = $112500 Step 2 - PMI is based on loan ammount so mult loan amt by 2% $112500*2% = 2250 |
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Chap 16 ques 6
A closing is to take place on May 15th. The property is rented and the tenant pays $600 on the first day of each month. At the closing: A: Buyer will owe the seller for 15 days rent B: seller will owe the buyer for 16 days rent C: tenant will recieve a refund for 1/2 month rent D: neither the sellers nor the buyers closing cost will be effected |
B: Seller owes the buyer 16 days rent
==================== chap 16 - 8 4. Prorating rent Most rental agreements provide that the rent must be paid in advance. The seller is entitled to recieve the rent up to and including the day of closing, but any rent already paid the covers a period after the closing day should be turned over to the new owner. |
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Chap 16 ques 7
If the slaes price on a transaction is $112,000 and the purchaser is acquiring a new loan, the transfer tax will be paid: A: The sales price B: On the loan amount C: on the price minus the loan D: none of the above |
A: sales price
==================== transfer tax is based on sales price - assumption but since there is no assumption mentioned in this question the tax is based on the sales price. |
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Chap 16 ques 8
If the sales price is $112,000 and the purchaser is assuming an existing loan in the amount of $80,000 and also obtaining a purchase money mortgage for $7000, the transfer tax will be paid on: A: Sale price B: sale price minus PMM C: sale price minus the assumtion D: sale price minus the PMM and the assumption |
C: Sale price minus the assumption
==================== chap 16 - 10 C. Calculating the Transfer Tax The transfer tax is a state tax usually charged to the seller when the title is transfered. The tax is charged at the rate of ten cents per hundred dollars of the sale price or portion thereof. The amount of an assumed loan is deducted. A new loan is not deducted. The sales price is divided by 100 and then, if that does not result in a whole number the result is rounded UP to the nearest whole number. The multiply by ten cents. FORMULA: Sales Price (Minus loan assumed), divided by 100 and rounded up to the nearest whole number X ten cents |
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Chap 16 ques 9
Which of the following is not likely to appear as a debit on the sellers closing statement A: Pay off of the existing loan B: Removal of an existing mechanics lein C: Transfer of a loan escrow account D: Proration of unpaid taxes |
C: transfer of a loan escrow account
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Chap 16 ques 10
At a closing to take place on March 10th, the tax bill for the calendar year will be due on July 1st and has not yet been paid: A: The seller owes for 69 days B: Seller owes for 68 days C: Buyer owes seller for a period January 1st to March 10th D: Niether party is charged sine the bill has not come yet |
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1st step figure # of days Closing is on March 10th therefore: Jan - 31 Feb - 28 Mar - 10 ------------- ttl 69 days Since taxes have NOT been paid but the seller occupied the property the seller owes the taxes and will pay the buyer and the buyer will then pay the entire tax bill when it comes due on 7/1. |
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Chap 16 ques 11
Which of the following statements is true regarding the pre-payment penalty on an existing loan: A: It will appear as a debit to the seller and a credit to the buyer B: it appears as a debit to the seller C: it always applied to a VA or FHA loan D: it is usually too small an amount to be of concern |
B: Debit to the seller
====================== chap 16-14 Line 4 shows under the Present loan pay off section making it a debit to the seller |
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Chap 16 ques 12
If the seller is paying part of the buyers finance cost, the cost well be calculated as a percentage of: A: Sales Price B: Gross Equity C: Seller loan D: Buyers Loan |
D: Buyers Loan
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Chap 16 ques 13
For the purposes of estimating the sellers cost u can assume the day of closing: A: Belongs to the seller B: Belongs to the buyer C: is split between the buyer and the seller D: does not count for either the buyer or the seller |
A: Belongs to the seller
==================== chap 16-2 II MATH STEPS TO FOLLOW WHEN CALCULATING A. Some general guidelines Since many calculations must be worked out to the day, it is important to know who is responsible for the day of closing. The seller is charged for the costs of ownership, such as property taxes and hazard insurance The seller also recieves credit for rent for the day of closing. |
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Chap 16 ques 14
The premium for PMI paid at closing can be charged: A: only to the seller B: only to the buyer C: to either the buyer or the seller D: Only the lender |
C: either the buyer or the seller
====================== This is stipulated in the contract. It would appear on line 15 of the estimated net seller sheet |
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Chap 16 ques 15
When the seller has agreed to make a purchase money loan to the buyer on the seller's net worksheet: A: this item will not appear B: this will appear as credit C: this will appear as debit D: this will appear as deferred income |
C: This will appear as a debit
================= Since the seller is giving the buyer money... |
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Chap 16 ques 16
The intangibles tax is calculated: A: On the sales price B: on the sales price minus assumption C: On the new loan amount D: on the sellers equity |
C: On the new loan amount
===================== chap 16 - 11 The intangible tax is assessed against any new loan, of more than $1500 that will require more than 3 years to repay |
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Chap 16 ques 17
PMI will most likely be charged when a buyer is getting: A: An FHA graduated payment loan B: a VA loan C: an 80% LTV conventional loan D: a 90% LTV conventional |
D: a 90% conv loan
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Chap 16 ques 18
Which of the following statements about the sellers net estimate is true A: Tou cannot prepare it until you have a contract B: It is only an approximation and therefore not very usefull C: it can be and often is an important part of the listing presentation D: it should not be used when presenting an offer because it might confuse the issue |
C: It can be and often is an important part of the listing presentation
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Chap 16 ques 19
Which of the following statements is true A: Hazard insurance is usually paid in advance B: Mortgage loan interest is usually paid in advance C: Rent is usually paid in arrears D: PMI is usually paid in arrears |
A: Hazard insurance is paid in advance
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Chap 16 ques 20 If a purchaser is buying a home for cash which of the following closing costs would NOT be reduced:
A: The intangible tax B The transfer tax C: the closing attorneys fees D: The discount points |
B: transfer tax
================= Since the transfer tax is based on the sales price minus and assumed loan there would be no impact. The intangible tax is charged against a new loan so it would not be a factor. Discount points are assessed agasinst a loand and attny fees are impacted because the attny represents the lender. |
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Chap 16 ques 21
The transfer tax is paid at a rate of A: $1.00 per 1000 B: $ 1.00 per $500 C: $ .50 per $500 D $ .10 per 100 |
$ $ .10 per $100
=================== (SP-assumedloan)/100=taxable amount round up to nearest 100 taxable amount*.10= trans tax |
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Chap 16 ques 22
The intangible tax is paid at a rate of? A: $ .10 per $100 B: $1.00 per $500 C: $1.50 per $500 D: $3.00 per $1000 |
C: $1.50 per 500
====================== New Loan amt/500 rounded up to the next whole number = taxable amt taxable amt X $1.50= int tax |
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Chap 16 ques 23
The transfer fee on a loan assumption is determined by? A: Multiply the sales price times the tax rate B: Mult the loan amt times the tax rate C: The seller D: The lender |
D: The lender
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Chap 16 ques 24
The brokerage fee is usually a percentage of the? A: Buyers loan amount B: Gross equity C: seller loan amount D: sales price |
D: sales price
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Chap 16 ques 25
A lender is quoting 6% plus two discount points for a certain type of residential mortgage loan. Which of the following is true regarding the discount points A: Two discount points will equal two percent of the sales price B: The points can be paid only by the borrower C: In effect, the buyer is getting his loan at a reduced price D: The discount points are prepaid interest |
D: The discount points are prepaid interest.
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