Ch 10 Housing Costs Practice for Test

Front

What is the formula to calculate annual real estate tax?

Back

Annual Real Estate Tax = (Market Value x Assessment Rate) x (Tax Rate in mills / 1000)

Front

If a property has a market value of $315,000 and an assessment rate of 100%, what is the assessed value?

Back

Assessed Value = Market Value x Assessment Rate = $315,000 x 1 = $315,000

Front

What does the term 'assessment rate' mean in real estate?

Back

The assessment rate is the percentage of the market value that is used to determine the taxable value of a property.

Front

How do you convert mills to a percentage for tax calculations?

Back

To convert mills to a percentage, divide the mills by 1000. For example, 32.15 mills = 32.15 / 1000 = 0.03215 or 3.215%.

Front

What is the assessed value of a property appraised at $150,000 with an assessment rate of 30%?

Back

Assessed Value = $150,000 x 0.30 = $45,000

Front

What is the replacement value of a property?

Back

The replacement value is the estimated cost to replace a property with a similar one at current prices.

Front

If a home is insured for 75% of its replacement value of $300,000, what is the amount of insurance?

Back

Insurance Amount = Replacement Value x 0.75 = $300,000 x 0.75 = $225,000.

Front

What is the amount of coverage on a home with a replacement value of $200,000 insured for 75%?

Back

Coverage Amount = $200,000 x 0.75 = $150,000.

Front

What is the mortgage loan amount if a townhouse costs $150,000 and the down payment is $20,000?

Back

Mortgage Loan Amount = Purchase Price - Down Payment = $150,000 - $20,000 = $130,000.

Front

What is the significance of the down payment in a home purchase?

Back

The down payment is the initial amount paid towards the purchase price of a home, reducing the amount needed for a mortgage.