CH 12 - Closing the Real Estate Transaction

The Know Before You Owe laws require the buyer to receive their Closing Disclosure:

• 3 calendar days before closing

• At the time of closing

• 3 business days before closing

• 5 business days before closing

What is the Closing Disclosure entry for a loan on a purchase money mortgage?

• credit seller, debit buyer

• credit buyer, debit seller

• credit buyer only

• debit seller only

Closing will take place on November 15th. Annual real estate property taxes are $1,260 and have been paid by the seller in advance. Which of the following would be the appropriate Closing Disclosure entries?

• $1,102.50 debit seller/credit buyer

• $157.50 credit seller/debit buyer

• $1,102.50 credit seller/debit buyer

• $157.50 debit seller/credit buyer

If personal property taxes appear on a residential Closing Disclosure, these taxes are normally:

• prorated between seller and buyer

• single entry debit to seller if the tax bill has been received and not yet paid by seller

• double entry item, debit seller/credit buyer, if taxes are to be paid later in the year by buyer.

• both single entry debit to seller if the tax bill has been received and not yet paid by seller AND a double entry item, debit seller/credit buyer, if taxes are to be paid later in the year by buyer.

Assume annual real estate taxes amount to $1,800 and have been paid in advance by the seller. If settlement date is set for September 15, which of the following is true?

• credit seller $525; debit buyer $1,275

• debit seller $525; credit buyer $525

• credit buyer $525; debit seller $1,275

• Credit seller $525; debit buyer $525

You are purchasing a four-unit apartment building and will close on November 14. Each apartment rents for $575 per month. On November 1, one apartment is vacant and the other tenants have paid the November rent. Compute the rent proration through the day of closing and indicate the proper entries on a Closing Disclosure.

• $805 credit seller/debit buyer

• $805 debit seller/credit buyer

• $920 credit seller/debit buyer

• $920 debit seller/credit buyer

Anne buys a home from Kim. She agrees to assume Kim’s existing mortgage loan, which carries an interest rate of 8% and is paid in arrears. Closing is set for July 20. The principal balance of the loan on July 1 is $130,000. How will the prorated interest for July be entered on the Closing Disclosure?

• credit Kim and debit Anne for $288.90

• debit Anne and credit Kim for $577.78

• credit Anne and debit Kim for $577.78

• credit Anne and debit Kim for $288.90

Determine the excise tax to be paid on a house that sells for $268,210 if the buyer makes a $25,000 down payment and the seller takes back a second mortgage for $50,000?

• $536.42

• $537.00

• $533.00

• $538.00

How much did Michelle net from a sale of her home at $205,000? Her expenses were:

Commission at a rate of 4.6%

$51,000 loan payoff

Excise tax at the standard rate

Deed preparation $15

Courier fee of $15

• $144,130

• $144,301

• $144,311

• $145.712

The buyer is going to assume the seller’s 7% loan with a loan balance of $82,000 as of the day of closing, which will be August 11. Of the following, which would be correct Closing Disclosure entries?

• $175.38 debit seller/credit buyer and $82,000 debit seller/credit buyer

• $175.38 credit seller/debit buyer and $82,000 debit seller/credit buyer

• $82,000 credit seller/debit buyer

• $82,000 debit seller/debit buyer and $175.38 credit seller/credit buyer