Chapter 10.

Question 1

Acre

Answer 1

A measure of land equaling 43,560 square feet.

Question 2

Commission

Answer 2

A sum due a real estate broker for services in that capacity

Question 3

Front Foot

Answer 3

Refers to the length of a parcel facing a street.

Question 4

Gross Income

Answer 4

Total income from property before any expenses are deducted.

Question 5

Net Income

Answer 5

The result of subtracting expenses from income.

Question 6

Hectare

Answer 6

Equal to 10,000 square meters.

Question 7

Interest

Answer 7

A fee paid by the borrower of a loan as a form of compensation for the use of money

Question 8

Point

Answer 8

Equal to one percent of a loan amount. For example, 1 point on a $100,000 is equal to $1,000.

Question 9

Principal

Answer 9

A sum of money lent or invested on which interest is paid.

Question 10

Real Property Tax Rate

Answer 10

The tax levy divided by the total taxable assessed value of a taxing jurisdiction, usually expressed in dollars per thousand, dollars per hundred, or mills.

Question 11

Principal

Answer 11

A sum of money lent or invested on which interest is paid.

Question 12

What is the interest rate on an interest only loan, if the principal balance is $574,000, and the annual payment after year 1 is $24,108…?

Answer 12

4.2 (Percent %)

Question 13

What is the area of a rectangle that measures 3 yards x 18 yards…?

Answer 13

54 sq. yards

Question 14

If a buyer is purchasing a house for $325,000, how much is paid in closing costs if the closing costs amount to 5.5 points…?

Answer 14

$17,875 (Dollars)

Question 15

What is the area of a triangle with a base dimension of 16’ and a height of 7’…?

Answer 15

56 sq.ft.

Question 16

What is the perimeter of a rectangular lot measuring 48’ x 97’…?

Answer 16

290’ (feet)

Question 17

1 square mile is equal to how many acres…?

Answer 17

640 acres

Question 18

How many acres are in a lot that measures 145’ x 450’…?

Answer 18

1.5 acres

Question 19

How many square feet are in one acre…?

Answer 19

43,560 sq.ft.

Question 20

1 square mile is equal to how many acres…?

Answer 20

640 acres

Question 21

How many acres are equal to 1 hectare…?

Answer 21

2.47 acres

Question 22

What is the mortgage recording tax paid on a property that sold for $215,000, assuming there is a tax rate of $2.05/$100 of the loan amount and the bank uses an 75% LTV…?

Answer 22

First, determine the loan amount. Since the bank used an 75% LTV, multiply the sales price of $215,000 by 75%. This equals $161,250. Next, divide the loan amount by $100. $161,250 / $100 = $1,612.50. Finally, multiply $1,612.50 by $2.05. This equals $3,306.

Question 23

What is the interest rate on an interest only loan, if the principal balance is $574,000, and the annual payment after year 1 is $24,108…?

Answer 23

To answer this question, you must simply divide the amount paid in interest by the loan amount. $24,108 / $574,000 = 0.042, or 4.2%.

Question 24

If a buyer obtains a mortgage for $715,000, how much is owed to the bank if the bank demands a loan origination fee of 2 points…

Answer 24

Since 2 points equals 2%, you must multiply the loan amount by 2%. $715,000 x 0.02 = $14,300.

Question 25

If a buyer is purchasing a house for $325,000, how much is paid in closing costs if the closing costs amount to 5.5 points…?

Answer 25

Since 5.5 points equals 5.5%, you must multiply the purchase price by 5.5%. $325,000 x 0.055 = $17,875.

Question 26

If a property is currently worth $325,000, what will the property be worth in 4 years, assuming a rate of appreciation of 2.5%…?

Answer 26

A safe way to determine the answer to this type of question is to multiply the current worth of the property by 1.025 (since the property is appreciating) 4 times (since the property is appreciating for 4 years. $325,000 x 1.025 = $333,125. $333,125 x 1.025 = $341,453.125. $341,453.125 x 1.025 = $349,989.453. $349,989.453 x 1.025 = $358,739.

Question 27

What is the perimeter of a rectangular lot measuring 48’ x 97’…?

Answer 27

you must add up the 4 side of the lot. 48’ + 97’ + 48’ + 97’ = 290’.

Question 28

How many acres are in a lot that measures 145’ x 450’…?

Answer 28

First, determine the area of the lot. 145 x 450 = 65,250 sq.ft.. Since 1 acre equals 43,560 sq.ft., we next must divide 65,250 into 43,560 to get an answer of 0.45 acres.

Question 29

If a property is currently valued at $925,000, what will the property be worth in 3 years, assuming the a rate of depreciation of 2.5%…?

Answer 29

To answer this question, start by multiplying the current value of $925,000 by 0.975 (since the property is depreciating by 2.5% per year, you must subtract 0.025 from 1). $925,000 x 0.975 = $901,875. Next, repeat this same calculation 2 more times, since the property will continue to depreciate by 2.5% for each of the next 2 years. The final calculation will equal $857,345.

Question 30

What is the decimal equivalent of 0.42%…?

Answer 30

you must carry the decimal point over 2 spaces. 0.42% equals 0.0042.

Question 31

If a lot is equal to 2.4 acres, and the width is equal to 222’, what is the length of the lot…?

Answer 31

To answer this question, first determine how many square feet are in 2.4 acres. Since one acre equals 43,560 sq.ft., 2.4 acres equals 104,544 sq.ft.. Next, divide 104,544 sq.ft. by the width of the lot. 104,544 / 222 = 471’.