Chapter 14 Flashcards
What is the Statutory Month Method?
In this method, divide the item to be paid by 12, and then by 30 days to determine the daily rate.
What is the closing disclosure?
is required by RESPA for all federally insured mortgage loans and it is the official settlement statement used by settlement agents and title companies to itemize all charges
Page 1 of the closing disclosure contains:
Closing information Transaction information Loan information Projected payments Costs at closing
Page 2 of the closing disclosure contains:
Description of costs
Cost paid by the borrower
Cost paid by the seller
Cost paid by others
The disclosure fist section deals with:
Loan costs such as:
- Origination charges
- Services the borrower did not shop for
- Services the borrower shop for
- The total of the costs for items 1, 2, 3,
The Next section deals with other costs:
- Taxes and government fees
- Prepaid such as homeowner’s insurance and property taxes
- Initial Escrow at closing
- Other costs
- The total of 1, 2, 3, 4
What is the pre-payment penalty?
It is % charged to the seller and to be paid to the lender when paying off a loan.
What is Florida Document Taxes and how does it work?
It is a state tax to the deed by the state of Florida and it requires the amount subject to taxation to be rounded to the nearest hundred. For example, $97,501 should be rounded to $97,600.
Charges commonly used in closing for the seller:
Credit: sales price, proration of rent
Debit: loans to be paid, interest on commission, prorated taxes, security deposits, prepaid rent, title insurance for the owner, preparation of the deed, state transfer tax on the deed, attorney’s fees
Charges commonly used in closing for the buyer
Credit: earnest money, new loan, prorated taxes, advance rents, security deposits
Debit: sales price, title insurance lender (mortgagees), preparation of mortgages and deed, recording of deed, recording of mortgage, documentary tax on note, intangible tax on mortgage, attorney fees, interest adjustment
