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57 Cards in this Set
- Front
- Back
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What is the purpose of the closing statement? (a) To summarize the financial aspects of a real estate transaction. (b) To determine the purchase price of the property. (c) To determine which party pays the brokerage commission. (d) To report income to the Internal Revenue Service. |
(a) To summarize the financial aspects of a real estate transaction.
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Which entry would normally appear as a debit on the buyer's statement? (a) First mortgage balance being assumed (b) Intangible tax on a new mortgage (c) Documentary stamps on the deed (d) Impound account balance when a loan is being assumed |
(b) Intangible tax on a new mortgage |
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Which of the following statements best describes a single-entry item? (a) It appears on both the buyer's and seller's statements. (b) It is not paid at closing. (c) It must be accounted for in the broker's statement. (d) It is always a credit. |
(c) It must be accounted for in the broker's statement.
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Which entry would appear as a credit on the seller's closing statement? (a) Documentary stamp tax on the deed (b) Recording the mortgage (c) Purchase price (d) Abstract continuation |
(c) Purchase price
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What document stipulates which party pays which expense in a closing? (a) Listing agreement (b) Purchase and sale contract (c) Deed (d) Mortgage |
(b) Purchase and sale contract
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How is an earnest money deposit held in escrow reflected on the closing statement? (a) Credit to the buyer (b) Debit to the buyer (c) Credit to both the buyer and seller (d) Credit to the seller |
(a) Credit to the buyer
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In the absence of any agreement between the parties, who pays the state documentary stamp tax on the deed? (a) The attorney (b) The broker (c) The seller (d) The state |
(c) The seller
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In a residential transaction, how is the brokerage fee reflected on the closing statement? (a) Credit to the buyer (b) Credit to the seller (c) Debit to the buyer (d) Debit to the seller |
(d) Debit to the seller
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Which of the following statements is correct regarding a double-entry item on a closing statement? (a) It must be accounted for in the broker's statement. (b) It does not appear in the broker's statement. (c) It is entered on the statement as a credit. (d) It is entered on the statement as a debit. |
(b) It does not appear in the broker's statement.
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How is the amount of a new mortgage obtained by the buyer entered on the closing statement? (a) Debit to the buyer (b) Credit to the seller (c) Credit to the buyer (d) Debit to the seller |
(c) Credit to the buyer
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How is the amount of a mortgage loan assumed at closing by the buyer entered on the closing statement? (a) Double entry (b) Single entry (c) Credit to the seller (d) Debit to the buyer |
(a) Double entry
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Who is paid the balance due from the buyer that is shown on the closing statement? (a) The seller (b) The mortgagee (c) The broker (d) The closing agent |
(d) The closing agent
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Who pays the balance due to the seller? (a) The buyer (b) The mortgagee (c) The closing agent (d) The broker |
(c) The closing agent
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Complete the statement. When determining prorations on a closing statement, the day of closing: (a) belongs to the closing agent. (b) is determined by agreement. (c) is the responsibility of the seller. (d) is charged to the buyer. |
(b) is determined by agreement.
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Which statement about the broker's portion of the closing statement is true? (a) All double-entry items must appear there. (b) Total receipts, minus the binder deposit, equal the grand total. (c) Receipts and disbursements must equal. (d) Total expenses, less the brokerage fee, equal the grand total. |
(c) Receipts and disbursements must equal.
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If a Broward County property sold for $102,750, what must be paid for the documentary stamp tax on the deed? (a) $616.20 (b) $616.80 (c) $718.90 (d) $719.60 |
(d) $719.60
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A mortgage in the amount of $83.255 is being assumed. What is the amount of documentary tax on the note that must be paid? a) $291.20 (b) $291.55 (c) $582.40 (d) $583.10 |
(b) $291.55
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A Palm Beach County property is being sold for $98,350 and the buyer is taking title subject to an existing mortgage in the amount of $61,220. What is the total amount of taxes due in this transaction? (a) $214.55 (b) $688.10 (c) $688.80 (d) $903.35 |
(c) $688.80
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A new loan in the amount of $73,550 is being originated. What is the amount of the state intangible tax on the mortgage?
(a) $147.10 (b) $257.43 (c) $514.85 (d) $1,471.00 |
(a) $147.10
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Real estate taxes in a transaction are $1,034. If a closing is to take place on April 16, with the day of closing belonging to the seller and the 365-day method is used, what is the amount of the proration and how is it handled? (a) Debit the seller and credit the buyer $297.45 (b) Debit the seller and credit the buyer $300.28 (c) Debit the buyer and credit the seller $287.45 (d) Debit the buyer and credit the seller $300.28 |
(b) Debit the seller and credit the buyer $300.28
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A residence is rented for $900 per month, with the rent due on the first of the month. If the property is sold on March 6, with the day of closing belonging to the buyer, what is the amount of the proration and how is it shown on the closing statement? (a) Debit the seller and credit the buyer $725.81 (b) Debit the seller and credit the buyer $754.84 (c) Credit the seller and debit the buyer $174.19 (d) Credit the seller and debit the buyer $754.84 |
(b) Debit the seller and credit the buyer $754.84
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A buyer has agreed to assume an existing mortgage loan having a balance of $86,346. Interest for the month of closing is $697. Closing is scheduled for July 14, with the day of closing belonging to the seller. How is the interest proration entered on the closing statement? (a) Debit the buyer and credit the seller $314.77 (b) Debit the buyer and credit the seller $382.23 (c) Debit the seller and credit the buyer $292.29 (d) Debit the seller and credit the buyer $314.77 |
(d) Debit the seller and credit the buyer $314.77
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Which of the following statements regarding abstract continuation and title insurance in a real estate closing is correct? (a) Providing clear title is generally the responsibility of the buyer. (b) The seller normally pays for title insurance. (c) The seller can require that the buyer use a specific title company even if the buyer is paying for title insurance. (d) The seller can provide either an abstract of title or title insurance as evidence of merchantable or marketable title. |
(d) The seller can provide either an abstract of title or title insurance as evidence of merchantable or marketable title.
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All of the following items would be prorated on a closing statement, EXCEPT: (a) Property insurance (b) Title insurance (c) Rental income (d) Property taxes |
(b) Title insurance
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On a closing statement, how are expenses entered that are paid to a third party? (a) Double entries (b) Credits (c) Debits (d) Prorations |
(c) Debits
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A property in Palm Beach County recently sold for $220,000. The purchaser arranged an 80% loan to finance the property. Calculate the documentary stamp tax on the deed. (a) $770 (b) $1,232 (c) $1,320 (d) $1,540 |
(d) $1,540
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An investor is selling a single family home which is currently occupied by a tenant. The closing is scheduled to take place on May 13th, and the parties have agreed that all prorations will be calculated as of midnight the day of closing. The tenant paid $1,800 rent to the seller on May 1st. How would this proration appear on the closing statement? (a) $754.84, debit buyer, credit seller (b) $754.84 debit seller, credit buyer (c) $1,045.16, debit buyer, credit seller (d) $1,045.16, debit seller, credit buyer |
(d) $1,045.16, debit seller, credit buyer
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Which tax will not be required in a transaction where the purchaser assumes an existing mortgage? (a) Stamp tax on the deed (b) Note tax (c) Stamp tax on the deed and on the note (d) Intangible tax |
(d) Intangible tax
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The sale of a property recently closed where the doc stamp tax on the deed was $4,375.00, and the intangible tax on the new mortgage was $937.50. What was the loan-to-value ratio? (a) 21% (b) 75% (c) 80% (d) 90% |
(b) 75%
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A vacant parcel of land is located in the NW ¼ of the SE ¼ of the SE ¼ of the SE ¼ of Section #13, T4N, R11E. The land is selling for $35.00 per square foot. Calculate the documentary stamp tax on the deed. (a) $26,680.50 (b) $26,869.50 (c) $38,115.00 (d) $3,811,500.00 |
(a) $26,680.50
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A property closes on August 12th. The annual property taxes are $9,750.00. The day of closing belongs to the buyer. How will the proration appear on the closing statement? (a) Debit the Seller and Credit the Buyer $5,956.85. (b) Debit the Buyer and Credit the Seller $5,956.85. (c) Debit the Seller and Credit the Buyer $3,793.15. (d) Debit the Buyer and Credit the Buyer $3,793.15. |
(a) Debit the Seller and Credit the Buyer $5,956.85.
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Which of the following correctly lists the taxes that the buyer must typically pay when purchasing a home with a new mortgage? (a) Note tax only (b) Intangible tax only (c) Documentary stamp tax on the deed only (d) Both the intangible tax and the note tax |
(d) Both the intangible tax and the note tax
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The binder deposit held in escrow by a broker would be entered on the closing statement as a _______________ to the _____________- |
credit to the buyer |
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The ____________- normally pays for the documentary stamp tax on the deed |
seller |
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Expenses on a closing statement are always entered as a _____________--- |
debit |
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The state documentary tax on the promissory note and intangible tax on a new mortgage is normally paid by the ______________- |
buyer |
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___________is paid in advance; ________- and ___________- are paid in arrears |
RENT is paid in advance (UNUSED) Mortgage interest (USED DAYS) and Tax are paid in arrears (USED DAYS) |
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Mortgage Interest formula proration |
used days x tax / days in the month
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Tax Formula proration |
used days x tax / 365 day |
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Rent advance proration formula |
unused daysxrent / days in the month
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On a new loan, the day of closing is always charged to the buyer for _____________________-- |
prepaid interest |
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Prorated rent is entered on the closing statement as a ________- to the seller and a _____________ to the buyer |
Deli Sandwhich Corn Beef DSCB Debit to the seller credit to the buyer (ALWAYS) |
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No taxes are payable on either the note of mortgage title when title is taken _____________________ the mortgage |
subject to |
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Which entry would appear as a credit on the seller's closing statement? a) documentary state tax on the deed b) recording the mortgage c) purchase price d) abstract continuation |
c) purchase price |
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how is an earnest money deposit held in escrow reflected on the closing statement? a)credit to the buyer b) debit to the buyer c) credit to both the buyer and the seller d) credit to the seller |
a)credit to the buyer |
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How are expenses that are paid to a third party entered on a closing statement? a)double entries b) credits c) debits d) prorations |
c) debits |
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What is a double entry on a closing statement? |
A double entry it affects both the buyer and seller and appears on both statements. A double entry is always a charge or debit to one party and a credit or benefit to the other party |
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What is a binder deposit? |
a credit to the buyer on the closing statement since this portion of the purchase has already been paid in the earnest deposit (escrow) |
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What are the two methods of calculating proration for the day of closing? |
365-day method (gold coast test) 12-month/30 day method (state test) |
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What are items subject to proration? |
Mortgage Interest, real estate taxes, insurance, and rent. |
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Rent proration formula |
Rent mulitplied by the number of unused days then divided by the amount of days in the month |
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property taxes proration formula |
annual property taxes mulitipled by the amount of used days divided by 365
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Who pays for the abstract continuation? |
the seller pays for the abstract continuation which is a history of the title to a property |
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Calculating state documentary tax on the deed(ROUND TO THE NEAREST HUNDRED) |
sale price /100 x .70 |
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Calculating state documentary tax on the note (ROUND TO THE NEAREST HUNDRED) |
sale price /100 x .35 SUBJECT TO MORTGAGES DONT PAY NOTE TAX |
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Calculating intangible tax on a Mortgage/Loan |
.002 x new loan(new mortgage) ASSUMED MORTGAGES DONT PAY INTANGIBLE TAXES--SUBJECT TO MORTGAGES DONT PAYINTANGIBLE TAXES |
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Which entry would normally appear as a debit on the buyer's statement? a) First mortgage balance being assumed b) intangible tax on a new mortgage c) documentary stamp tax on the deed d) impound account balance when a loan is being assumeed |
b) intangible tax on a new mortgage |
