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Real Estate Exam > Closings 2 > Flashcards

Closings 2 Flashcards

1
Q
  1. If a worksheet for settlement at closing contains a lender requirement for tax escrow reserves, it means that:
    A. The government will wait for payment until home is resold.
    B. Escrow reserve account has been established to protect lenders interests.
    C. And escrow reserve account has been established to protect sellers interests.
    D. The seller will receive a credit for funds he has contributed.
A

B. The escrow reserve account has been established to protect lenders interests.

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2
Q 
2. A lender is requiring to discount points on a $425,000 sales price with a 90% new loan to value. If seller agrees to pay these points, the settlement sheet will reflect:
A. $7650 debit seller, single entry.
B. $7560 debit seller, single entry.
C. $7650 debit seller, credit lender.
D. $7065 debit buyer, single entry.
A

A. $7650 debit seller, single entry.

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3
Q 
3. Loan discount points are:
A. Based on purchase price.
B. Considered prepaid interest.
C. Reported on closing statement as a credit to buyer.
D. Decreases lender yield.
A

B. Considered prepaid interest.

Number C is wrong because it would show on the closing as a debit to the buyer.

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4
Q 
4. Water bill payments are due in arrears for a payment of $58. This covers May and June. Closing is June 10. How is this reflected on closing statement?
A. Debit buyer $38.03, credit seller.
B. Debit seller $38.03, credit buyer.
C. Debit buyer $19.97, credit seller.
D. Debit seller $19.97, credit buyer.
A

B. Debit seller $38.03, credit buyer.

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5
Q
  1. Unpaid escrow taxes for the preceding year at a January 10 new loan closing are:
    A. Debit to seller and credit buyer.
    B. Debit seller and credit broker.
    C. Prorated.
    D. Dealt with in terms of the lenders instructions.
A

D. Dealt with in terms of lenders instructions.

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6
Q 
6. What is the documentary fee for a sale of a property with a purchase price of $192,000?
A. $92
B. $19.20
C. $192
D. Zero dollars
A

B. $19.20
Rationale: the figure is based on 1/10000 of $192,000. move decimal point four digits to the left. Which would be $19.20

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7
Q 
7.  What would the nonresident seller tax B or sale of a property with the purchase price of $92,000?
A. $1840
B. $3680
C. $2760
D. Zero dollars
A

D. Zero dollars
Rationale: the nonresidents seller taxes is 2% of the purchase price. unless it is less than $100,000 and then there would be zero taxes.

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8
Q
  1. The fee for an appraisal paid for by the buyer three weeks before closing is:
    A. A debit to the seller and credit to buyer.
    B. A credit to buyer debit to broker.
    C. Not entered on the sheet but marked POC
    D. A credit to broker and a debit to buyer.
A

C. Not entered on the worksheet but marked POC.

POC means paid outside of closing.

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9
Q 
9. How is the charge for an attorney to examine title documents on behalf of the buyer normally shown on the worksheet in an assumption closing?
A. Debit seller, credit broker.
B. Debit seller, credit buyer.
C. Credit broker, debit buyer.
D. Credit seller, credit broker.
A

C. Credit broker, debit buyer.

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10
Q 
10. At an April 4 closing (assumption), how is the April rent of an $1800 collected in advance by a seller entered on the worksheet?
A. Debit seller, credit broker $1800.
B. Credit seller, debit broker $1620.
C. Debit seller, credit buyer $1620.
D. Single entry credit buyer $1620.
A

C. Debit seller, credit buyer $1620. Rationale: 27 days times $1800 divided by 30 total days.

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11
Q 
11. Calculate the interest on and assumed that loan of $121,753.43 at an interest rate of 6.75% with a July 9 closing with the first payment due September 1. 
A. $176.74
B. $180.13
C. $182.63
D. $193.12
A

A. $176.74

Rationale: 8218÷12 over 12 equals $684.86. This is the amount you have to prorate.

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12
Q 
12. Calculate the interest on a new second loan of $12,000 at an interest rate of 10% with the July 9 closing.
A. $74.19
B. $75.62
C. $76.66
D. $73.21
A

B. $75.62
Rationale is 10% of $12,000 is $1200 that’s the amount you need to prorate. It’s 23 days times $1200 divided by 365 days.

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13
Q 
13. At and August 30 closing, the current year's taxes of $956.30 would be entered on a worksheet as:
A. Debit seller, credit broker $631.42
B. Debit buyer, credit broker $631.42
C. Debit seller, credit buyer $640.19
D. Debit seller, credit buyer $631.42
A

D. Debit seller, credit buyer $631.42.

Rationale: 241 days times $956.30 divided by 365 days.

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14
Q
  1. Where is the new loan entered on the closing sheet in a new loan closing?
    A. A new loan amount is never entered on the closing sheet.
    B. Debit the seller, since the majority of the purchase price goes to his credit.
    C. Credit the buyer, single entry, online three, representing trust deed payable to line.
    D. Double credit entry to buyer and broke her online trust deed payable to.
A

C. Credit the buyer, single entry, online three, representing trust deed payable to line.
Rationale: this is the only question in the entire exam that will give you a line to put something on.

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15
Q 
15. Net loan proceeds in a new loan closing are entered on the settlement sheet as a:
A. Credit buyer, debit broker
B. Debit buyer, credit seller
C. Credit broker, single entry
D. Debit broker, single entry
A

D. Debit broker, single entry

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16
Q
  1. Homeowners fees of $40 are paid to a dance by the seller for June 11 closing. HOA fees that have not been paid by the seller are prorated as follows:
    A. Debit seller $26.67
    B. Debit buyer $26.67, debit seller $13.33
    C. Debit buyer $26.67
    D. Debit buyer $40
A

B. Debit buyer $26.67, debit seller $13.33.

Rationale: H OA’s are debited to both buyer and seller when they have not been paid.

17
Q 
17. How will the loan origination fee be shown on the settlement sheet?
A. Debit buyer, no entry to seller
B. Debit buyer, credit seller
C. Debit seller, no entry to buyer 
D. Debit seller, credit buyer
A

A. Debit buyer, no entry to seller

18
Q 
18. How old property taxes paid in advance be shown on the settlement sheet?
A. Credit seller, debit buyer
B. Debit seller, credit buyer
C. Debit seller, no entry to buyer 
D. Credit buyer, debit broker
A

A. Credit seller, debit buyer

19
Q 
19. In a closing involving a new loan, the net loan proceeds will be shown as:
A. Debit broker, credit buyer
B. Debit buyer, credit broker
C. Credit buyer only
D. Debit broker only
A

D. Debit broker only

20
Q 
20. Taxes of $3250 paid in advance are prorated through the day of closing May 10,  based on a calendar year the entry would be:
A. $2092.46 credit seller, debit buyer
B. $1148.60 debit buyer, credit seller
C. $2101.36 debit seller, credit buyer
D. $2076.39 debit buyer, credit seller
A

A. $2092.46 credit seller, debit buyer

Rationale: 235 days times 3250÷365 days

Real Estate Exam (21 decks)

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