Computations Title Closing

Question 1

The state of being behind in the discharge of an obligation; paid at the end of the period for which due (the opposite of in advance).

Answer 1

arrears

Question 2

As a verb, to make an entry on the right or credit side of an account; as a noun, payment or value received.

Answer 2

credit

Question 3

As a verb, to make an entry on the left or charge side of an account; as a noun, a charge or expense.

Answer 3

debit

Question 4

A method for amortizing a mortgage whereby the borrower pays the same amount each month.

Answer 4

Fully amortized loan or level-payment loan

Question 5

The party employing the services of a real estate broker; amount of money borrowed in a mortgage loan, excluding interest and other charges.

Answer 5

principal

Question 6

The amount one makes over and above one’s cost.

Answer 6

profit

Question 7

To divide or assess proportionate shares of charges and credits between the buyer and the seller according to their individual period of ownership. (Such as property taxes)

Answer 7

prorate

Question 8

5. A senior sales associate receives 55 percent of all sale commissions earned. His broker has listed a motel for $1,450,000. The listing contract specifies a 6 1/2 percent sale commission for the first 600,000 of the selling price, 7 percent for the next $800,000, and 8 percent commission on all of the actual sale price exceeding $1.4 million. What will the sales associate’s commission be if he sells the motel for the listed sale price?

Answer 8

$54,450

Question 9

6. The interest portion of a man’s first monthly payment on a 30-year, 12 percent mortgage amounts to $550. If the loan-to-value ratio for the man’s house is 80 percent, how much did he pay for the house? a. $44,000 b. $55,000 c. $68,750 d. $110,000

Answer 9

C

550 x 12 months = 6600

6600 / .12 = 55000

55000 / .8 = 68750

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Question 10

8. A broker lists a property, a 7 percent commission is agreed to, and the listing is placed in the MLS. The sale commission is to be split as follows: 45 percent to the listing broker and 55 percent to the selling broker. A sales associate who works for a cooperating broker sells the property for $160,000. The sales associate’s agreement with her employer calls for a 60 percent share to her of all commissions she brings to the company. How much is due the sales associate?

Answer 10

$3,696

Question 11

9. A woman owned 3/8 of a property. She was paid $45,000 as her share of the proceeds from the sale of the property. What was the total selling price of the property?

Answer 11

$120,000

3/8 = .375

45000 / .375 =120,000

Question 12

11. You have a VA mortgage of $48,000 at 9 percent with a 30-year term. The monthly principal and interest payment is $386.21. What portion of the second month’s payment will apply to amortization of the mortgage? a. $26.21 b. $26.41 c. $359.80 d. $360.00

Answer 12

B

Question 13

12. In the mortgage cited in question 11, ($48,000 at 9 percent with a 30-year term. The monthly principal and interest payment is $386.21.) what would the monthly payments amount to if your property taxes were $840 and your annual insurance $570? a. $433.71 b. $456.21 c. $474.71 d. $503.71

Answer 13

D

Question 14

13. A woman bought three 200-foot lots on a lake for $500 per front foot each. She then subdivided these lots into six lakefront lots, which she then sold for $62,500 each. What was her percentage of profit on the sales?

Answer 14

25%

600 FT x $500 = $300,000

6 x $62500 = $375,000

$375,000 - $300,000 = $75,000

$75,000 / 300,000 = .25

Question 15

14. A warehouse measures 720 feet by 500 feet and rents for $118,000 a month. What is the rent per square foot per month?

Answer 15

$.33

720 X 500 = 360,000

118,000 / 360,000 = .327

Question 16

15. A man incurred a 20 percent loss when he sold a 10-acre parcel (Tract A) for $100,000. He also owns a 25-acre parcel (tract B) for which he paid $200,000. How much must he sell Tract B for if he wishes not only to recover his loss from Tract A but also to realize a 20 percent profit on his investment in Tract B?

Answer 16

$265000

100,000 / .8 = 125,000

200,000 X ,2 = 40,000

25,000 + 40,000 = 65,000

65,000 + 200,000 = 265,000

Question 17

16. A couple is purchasing an apartment building. Each of the five apartments rents for $815 per month. The closing is scheduled for September 16, and the rents were collected on September 1. What is the rent proration for this transaction and to whom will the amount be credited? (Day of closing belongs to the buyer.) a. $407.50, credit buyer b. $1,901.67, credit seller c. $2,037.50, credit buyer d. $2,173.33, credit seller

Answer 17

$2,173.33, credit seller

815 X 5 = 4075

4075 / 30 = 135.83

135.83 X 16 = 2173.33

Question 18

18. How is the buyer’s earnest money entered on the closing statement? a. Debit to buyer only b. Credit to buyer only c. Debit to seller and credit to buyer d. Debit to buyer and credit to seller

Answer 18

B

Question 19

19. How is the purchase price entered on the closing statement? a. Credit to seller only b. Credit to buyer only c. Credit to seller and debit to buyer d. Credit to buyer and debit to seller

Answer 19

B

Question 20

20. How are unpaid property taxes entered on the closing statement? a. Debit to seller only b. Debit to buyer only c. Credit to seller and debit to buyer d. Credit to buyer and debit to seller

Answer 20

A

Question 21

Amortiztion triangle

Answer 21

Principal balance x annual interest rate / 12 = month’s interest

Monthly payment - month’s interest = amt pd toward principal

Principal balance - amt pd toward principal = new princ. bal.

Repeat