CH12: NC Real Estate Exam Practice Questions | Transactions

Question 1

The cost of preparing a deed appears as a:

a. debit in the buyer’s statement
b. credit in the seller’s statement
c. credit in the buyer’s statement
d. debit in the seller’s statement

Answer 1

d. debit in the seller’s statement

Question 2

The amount of the earnest money deposits appears in:

a. buyer’s closing statement as a credit
b. seller’s closing statement as a debit
c. buyer’s closing statement as a debit
d. seller’s closing statement as a credit

Answer 2

a. buyer’s closing statement as a credit

Question 3

Matt is obtaining a mortgage loan of $178,000 at 5.5% interest. Settlement is to occur on the 27th day of the month. How will the interim interest appear on the settlement worksheet?

a. $743.13 debit - buyer
b. $706.94 debit - buyer
c. $108.76 debit - buyer
d. $81.57 debit - buyer

Answer 3

c. $108.76 debit - buyer

Step #1: 30 days minus 27 days = 4 days (count the day it’s on)
Step #2: 178,000 x 5.5% = 9790
Step #3: 9790 divided by 30 days = 27.19
Step #4: 27.19 x 4 =108.76

Question 4

In a residential backed mortgage loan for the purchase of a property transaction, RESPA requires all of the following EXCEPT:

a. use of the closing disclosure (CD)
b. a 3 day right of rescission
c. a good faith estimate
d. The providing of the informational booklet Know Before You Owe

Answer 4

b. a 3 day right of rescission

Question 5

If a property were listed for sale at $130,000 and sold for $128,500 a 6% broker’s fee would appear in the seller’s statement as a:

a. credit if $7,800
b. debit of $7,710
c. Credit of $7,710
d. Debit of $7,800

Answer 5

b. debit of $7,710

Question 6

In a real estate transaction, the buyer obtained a loan in the amount of $160,000. The lending institution charged 1 discount point, which the buyer agreed to pay. The cost of this point appears as a:

a. Credit to the buyer’s statement of $1,600
b. Debit to the seller’s statement of $1,600
c. Debit to the buyer’s statement of $1,600
d. Credit to the seller’s statement of $1,600

Answer 6

c. Debit to the buyer’s statement of $1,600

Question 7

The day of closing is typical:

a. charged to the seller
b. charged to the buyer
c. split equally between the buyer and seller
d. it depends on the type of loan

Answer 7

a. charged to the seller

Question 8

Provided nothing is written into the contract to the contrary, a wood destroying insect report will appear on the closing statement as a:

a. debit to the buyer, credit to the seller
b. credit to the buyer, debit to the seller
c. credit to the seller only
d. debit to the buyer only

Answer 8

d. debit to the buyer only

Question 9

A duplex is being rented for $600 per unit and is being sold to an investor with closing to be on the 22nd of September. How will the resulting entry appear on the closing worksheet?

a. $160 debit seller, credit buyer
b. $160 debit-buyer, credit-seller
c. $320 debit-seller, credit-buyer
d. $320 credit-seller, debit-buyer

Answer 9

c. $320 debit-seller, credit-buyer

Step #1: 600 x 2 (duplex) =1200
Step #2: 1200 divided by 30 days in the month $40
Step #3: 40 x 8 =$320

Question 10

In North Carolina, the closing meeting is typically held at the:

a. listing agent’s office
b. selling agent’s office
c. attorney’s office
d. courthouse

Answer 10

c. attorney’s office

Question 11

The cost of the due diligence fee appears as a:

a. credit to the seller and debit to the buyer
b. debit to the buyer and a credit to the seller
c. credit to the buyer and a debit to the seller
d. debit to the seller

Answer 11

c. credit to the buyer and a debit to the seller

Question 12

A buyer purchased a rental property and closed the transaction on July 20. The tenant had paid rent for the month of July in the amount of $600 on July 1st. The rent should be shown as:

a. $200 debit to the buyer and credit to the seller
b. $400 debit to buyer and credit to the seller
c. $200 debit to seller and credit to buyer
d $400 debit to buyer and credit to the seller

Answer 12

c. $200 debit to seller and credit to buyer

Step #1: $600 diveded by 30 days =
Step #2: 3- days minus 20 days = 10 days
Step #3: 10 days x 20 = 200

Question 13

It is a requirement of TRID that the loan estimate is given to the borrower no later than 3 business days of the:

a. date of loan application
b. date of loan acceptance
c. due diligence date
d. date of closing

Answer 13

a. date of loan application

Question 14

A property sold for $151,050. The excise tax on the transaction will appear on the closing worksheet as a:

a. $151.50 credit to the seller
b. $152.00 debit to the seller
c. $302.00 debit to the seller
d. $303.00 debit to the seller

Answer 14

d. $303.00 debit to the seller

Step #1: $151,050 divided by $500 = 302.1
Step #2: Round up is 303.00

Question 15

The cost of recording the deed would appear as a ____ on the closing statement?

a. debit to the buyer
b. debit to the seller
c. credit to the buyer
d. credit to the seller

Answer 15

a. debit to the buyer

Question 16

Which term is ALWAYS a single-sided entry?

a. assumed mortgage
b. sales price
c. new first mortgage
d. rental income

Answer 16

c. new first mortgage

Question 17

Which expenses are typically prorated between the buyer and the seller on the closing statement?

a. private mortgage insurance
b. interim interest
c. commission to the agent
d. real property taxes

Answer 17

d. real property taxes

Question 18

Property is being sold with settlement set for March 19. Property taxes for the year are estimated at $864. How will the resulting entry appear on the settlement worksheet?

a. $674.40 debit-seller, credit-buyer
b. $674.40 debit-buyer, credit-seller
c. $189.60 debit-seller, credit-buyer
d. $189.60 debit-buyer, debit-seller

Answer 18

c. $189.60 debit-seller, credit-buyer

Step #1: $864 divided by 360 days = $2.40 per day
Step #2: 79 days x 2.40 = 189.60

Question 19

According to TRID, which of the following items would NOT be considered a required element of a loan application?

a. borrower’s monthly income
b. borrower’s social security number
c. purchase priced
d. estimated value of the property

Answer 19

c. purchase priced

Question 20

Rico is obtaining a mortgage of $243,250 at 5.25% interest with settlement to be conducted on June 26th. How will the resulting entry for the interim interest appear on a closing worksheet?

a. $141.88 debit-buyer
b. $177.37 debit - buyer
c. $886.75 credit-buyer
d. $922.22 credit-buyer

Answer 20

b. $177.37 debit - buyer

Step #1: $243,250 x 5.25% = 12770.625
Step #2: 12770.625 divided by 360 days = 35.47 per day
Step #3: 35.47 x 5 days owned = $177.37

with closing count the day for buyer