Chapter 16 Flashcards
A contract states that the taxes be prorated between the buyer and seller. The taxes have been paid in advance. The proper entry on the closing statement is
A. Debit the seller and debit the buyer for the same amount
B. Credit the seller for taxes accrued before close and credit the buyer for the unused portion covering the period after close
C. Credit the seller and debit the buyer
D. Debit the seller and credit the buyer
C. Credit the seller and debit the buyer
The lender will require a two-month reserve for insurance at closing. The insurance premium for a one-year policy has been paid outside of closing. The entry on the closing statement is
A. Debit the seller
B. Credit the buyer
C. Debit the buyer
D. There is no entry
C. Debit the buyer
The interest pre-paid on the closing statement with a new loan on the property by the buyer is
A. Credit to the buyer
B. Credit to the seller
C. Debit to the buyer
D. Debit to the seller
C. Debit to the buyer
Which of the following would NOT be a debit to the seller at closing?
A. IRS lien
B. Amount of buyer’s new loan
C. Amount of the loan the buyer is assuming
D. Broker’s commission
B. Amount of buyer’s new loan
On a closing statement, the earnest money paid by the buyer would be which of the following?
A. Debit buyer, credit seller
B. Credit buyer, debit seller
C. Credit buyer only
D. Credit seller only
C. Credit buyer only
On a closing statement, the amount of the sales price would be
A. Debit seller, credit buyer
B. Debit buyer, credit seller
C. Debit buyer only
D. Credit seller only
B. Debit buyer, credit seller
If the buyer is assuming an existing loan on the property, which of the following is prorated at closing?
A. Interest only
B. Principal only
C. Mortgage principal
D. Both interest and principal
A. Interest only
Once recorded, the buyer will receive the deed to the property from the
A. Title company
B. Escrow company
C. County recorder
D. County treasurer
C. County recorder
What does an escrow company do?
A. Process loan forms
B. Authorize commission payments
C. Offer title insurance
D. Calculate prorations
D. Calculate prorations
When would IRS form 1099-S be used?
A. Report foreign investors
B. After a foreclosure sale
C. To defer capital gains on a sale
D. To report sales price
D. To report sales price
What document is recorded with the deed?
A. Affidavit of value
B. Purchase contract
C. Property disclosure
D. Closing disclosure
A. Affidavit of value
A bring down endorsement is associated with which of the following?
A. Points
B. Origination fee
C. Title
D. Homeowners insurance policy
C. Title
Which law requires the delivery of the closing disclosure prior to loan communication?
A. ECOA
B. FIRPTA
C. RESPA
D. HUD
C. RESPA
What is the purpose of the Foreign Investment Real Property Act?
A. Reports the sale of personal property
B. Reports the sales price to IRS
C. Requires tax withholding if seller is a non-resident alien
D. Describes the loan status of foreign nationals
C. Requires tax withholding if seller is a non-resident alien
In a real estate closing, what would the buyer normally pay for?
A. Deed preparation
B. Real estate commission
C. Release of old liens
D. Recording of new loan
D. Recording of new loan
