Section 17: Property Conditions and Disclosures Flashcards
Property Conditions And Disclosures:
When In Doubt Disclose:
* When should there be disclosures?
o When ________ exist that affect property value or intended use by
someone else normally in a real estate transaction for sale.
Conditions
Property Conditions And Disclosures:
When In Doubt Disclose:
* ________:
Declare, explain, obtain documentation, give choices to the parties so that they can make an informed decision and not hold other party liable.
Disclosure
Property Conditions And Disclosures:
When In Doubt Disclose:
Agents’ best recourse is to be the ________ of the source and to disclose anything that you feel is important to the transaction.
Source
Property Conditions And Disclosures:
When In Doubt Disclose:
* Our duty is to protect the public, as well as ourselves and the brokerage.
* Often best said- if ________ would want to know about it, disclose it.
You
Property Conditions And Disclosures:
Duties of Disclosures:
* Any individual who is party to a real estate transaction and has knowledge of something that could ________ impact the transaction has a duty to disclose.
Materially
Property Conditions And Disclosures:
Duties of Disclosures:
* Common law has imposed duties on ________ of real estate, especially residential to disclose any material facts known to the seller affecting the value or desirability.
Sellers
Property Conditions And Disclosures:
Duties of Disclosures:
* SELLERS must disclose:
o Written list of known property ________.
o Answer buyer questions regarding property condition.
o Disclose any information wherein previous disclosure might lead to false assumption.
Defects
Property Conditions And Disclosures:
Duties of Disclosures:
* Buyers also have a duty to deal honestly and fairly with all parties including the seller.
o BUYERS who knowingly can’t close on a transaction are guilty of failure to disclose pertinent facts and can be held ________ for damages.
Liable
Property Conditions And Disclosures:
Duties of Disclosures:
o Buyers are responsible for actual notice however: the buyer is ALSO responsible for inspection of ________, like public records for liens, or attachments.
Notices
Property Conditions And Disclosures:
Duties of Disclosures:
* Real estate agents have a duty to ________ parties involved in a transaction – not just the person or entity that they are representing but also to the other party and agents.
All
Property Conditions And Disclosures:
Duties of Disclosures:
* Real Estate Brokers and Agents have the MOST liability since they are licensed and trained in ALL aspects of ________.
Disclosure
Property Conditions And Disclosures:
Duties of Disclosures:
Agent Disclosures:
o Agents must disclose any information that may negatively affect the ________ paid.
Price
Property Conditions And Disclosures:
Duties of Disclosures:
Agent Disclosures:
o Must also disclose IF KNOWN, that their party may not be able to ________.
Perform
Property Conditions And Disclosures:
Duties of Disclosures:
Agent Disclosures:
o Sellers agent may know of a ________ that could prohibit the sale.
Divorce
Property Conditions And Disclosures:
Duties of Disclosures:
Agent Disclosures:
o Buyers agent may know that buyer is planning on filling for ________.
Bankruptcy
Property Conditions And Disclosures:
Duties of Disclosures:
* Realtors® may be held to an even HIGHER standard as they all pledge to abide by and
uphold the National Code of Ethics.
* The “________” is the easiest answer to disclosure.
o Would you want someone to disclose this item to you
o If you answer yes, DISCLOSE IT!
* It is always better to error on the side of caution and to disclose vs not disclose and face consequences later.
Golden Rule
Property Conditions And Disclosures:
Contracts:
* Agents commonly use Boilerplate contracts and addendums drafted and modified by the ________ for real estate contracts.
* In the contracts are certain stipulations that must be followed by all parties in order to protect not only the agent/broker but also buyers and sellers.
Arizona Association of Realtors (AAR)
Property Conditions And Disclosures:
Seller Property Disclosure Statements (SPDS):
Purchase Contract requires the seller to provide the buyer with the Seller Property Disclosure Statements (SPDS) within ________ Days of the acceptance of the contract.
3 Days
Property Conditions And Disclosures:
o SPDS means ________.
Seller Property Disclosure Statements
Property Conditions And Disclosures:
Seller Property Disclosure Statements (SPDS):
Seller Property Disclosure Statements (SPDS) is a very important source of information that buyers and inspectors rely upon to educate themselves on the history of the home.
The sellers will fill out the SPDS to the best of their ability and must disclose latent defects, ownership history, ________, previous damages and so on.
Pests
Property Conditions And Disclosures:
Seller Property Disclosure Statements (SPDS):
* Buyers will have their inspection period to investigate any items found in the Seller Property Disclosure Statements (SPDS).
or any other type of inspection they deem necessary pertinent to the sale.
*This is also known as the buyers ‘________’.
Due Diligence Period
Property Conditions And Disclosures:
Seller Property Disclosure Statements (SPDS):
________:
Steps taken by someone to verify important information.
Due Diligence
Property Conditions And Disclosures:
Seller Property Disclosure Statements (SPDS):
In Arizona it is commonly the ________ Day Due Diligence inspection period unless agreed to otherwise.
10 Day
Property Conditions And Disclosures:
________:
* At the end of the inspection period, buyers sign a this to give to sellers.
Buyers Inspection Notice and Sellers Response (BINSR)
Property Conditions And Disclosures:
Due Diligence Inspection Period:
o BINSR means ________.
Buyers Inspection Notice and Sellers Response
Property Conditions And Disclosures:
Buyers Inspection Notice and Sellers Response (BINSR):
o After receipt the buyer must ________ any defects that they deem important that they want the seller to fix before closing.
Disclose
Property Conditions And Disclosures:
Buyers Inspection Notice and Sellers Response (BINSR):
Buyer’s Duties:
o Accept property in condition.
o Ask for repairs to be made.
o Or can elect to ________ the contract.
Cancel
Property Conditions And Disclosures:
Buyers Inspection Notice and Sellers Response (BINSR):
If elect to cancel, buyers are entitled to their ________ back.
Earnest Money Deposit
Real Life Note:
The Due Diligence Inspection period is NOT to be used as an opportunity to renegotiate the offer and acceptance terms. This is often done, but it is incorrect. The Buyers Inspection Notice and Sellers Response (BINSR) does NOT discuss money, or terms but instead address the ________ condition of the property.
Physical
Property Conditions And Disclosures:
Quiz:
Choose the correct statements that explain duties of disclosure…
Seller must present a written list of known property defects
Brokers are not held to the same standard of duty to deal with honesty and fairness.
Buyers are responsible for inspections of notice
Agents must disclose any information that may negatively affect the price paid
Seller must present a written list of known property defects
Buyers are responsible for inspections of notice
Agents must disclose any information that may negatively affect the price paid
Property Conditions And Disclosures:
Study Guide:
What are a potential buyer’s options at the end of the inspection period?
At the end of the inspection period, buyers have three options: Accept the property, Reject (Cancel), or counter the property’s condition. If they choose to accept, it’s taken as-is. If they cancel, everyone is returned to the standard starting point. If they counter the condition, the buyers will present the BINSR to sellers in Arizona. (BINSR Buyers Inspection Notice and Sellers Response.)
Property Conditions And Disclosures:
Study Guide:
Your client (a buyer), six days after signing a purchase contract, decides that they no longer want to buy the home and gives you no reason as to why. Can they receive their earnest money back?
If the client elects to cancel, buyers are entitled to their Earnest Money back.
Property Conditions And Disclosures:
Study Guide:
What is the purpose of the SPDS?
SPDS is a significant source of information that buyers and inspectors rely upon to educate themselves on the home’s history. The sellers will fill out the SPDS to the best of their ability and must disclose latent defects, ownership history, pests, previous damages, and so on.
Property Conditions And Disclosures:
Study Guide:
A day after receiving the SPDS, your client (a buyer) calls you and asks for your opinion on a roofing repair done in 2015. They want to know if you think it was done correctly. How would you proceed?
As real estate agents, you are not qualified or licensed to discuss the construction or defects in real property. The best course of action here would be to refer them to a licensed roofer for a more qualified opinion.
Property Conditions And Disclosures:
Quiz:
How many days does a seller have to furnish SPDS to a buyer after acceptance of the contract?
Two
Three
Ten
Ten business days
Three
Property Conditions And Disclosures:
Quiz:
What is a seller not required to disclose?
Private airports nearby
Proximity to a sex offender
Expansive soils
Fissures
Proximity to a sex offender
Property Conditions And Disclosures:
Quiz:
Which of these issues does not require disclosure?
Sick building syndrome
A previous occupant with HIV
Dry wells
Polychlorinated biphenyls
A previous occupant with HIV
Property Conditions And Disclosures:
Quiz:
What is a seller not required to disclose to the buyer?
List of known property defects
Minimum acceptable price
Answers about property condition
Any information wherein previous disclosure might lead to false assumption
Minimum acceptable price
Property Conditions And Disclosures:
Quiz:
All of the following statements except which one are true with regards to disclosures in real estate?
Material Facts Must Disclosed if Known
Seller is liable in Arizona to disclose existence of haunted houses
The house was the site of a natural death years ago
The agent must correct any misconceptions that the buyers may have about the property
Seller is liable in Arizona to disclose existence of haunted houses
Property Conditions And Disclosures:
Quiz:
What must be signed by the buyer after the inspection period?
SPDS
Due diligence report
Home inspection
BINSR
BINSR
Property Conditions And Disclosures:
Quiz:
If a buyer elects to cancel the contract during the inspection period, what will they receive?
Earnest money
BINSR
Down payment
Home inspection fee
Earnest money
Property Conditions And Disclosures:
Quiz:
What options does a BINSR not provide to a potential buyer?
Elect to cancel the contract
Lower their offer price
Ask for repairs to be made
Accept the property in condition
Lower their offer price
Property Conditions And Disclosures:
SPDS/BINSR:
To be used solely and exclusively by members of the ________.
Arizona Association Of Realtors® (AAR)
Property Conditions And Disclosures:
Material Facts and Defects:
* ________:
Items that if known would have changed the outcome.
Material Facts
Property Conditions And Disclosures:
Material Facts and Defects:
* Material Facts:
* If Material facts are not disclosed and discovered later that a party had knowledge, this is grounds for the other party to seek damages and ________.
Remedies
Property Conditions And Disclosures:
Material Facts and Defects:
* Material Facts:
* Failure to disclose material facts or defects is common ground for lawsuits against agents – especially when agent is self-representing as an ‘________’.
Owner Agent
Property Conditions And Disclosures:
Material Facts and Defects:
* Material Facts:
* Parties cannot claim ________ to certain situations like roof leaks or broken pipes.
Ignorance
Property Conditions And Disclosures:
Material Facts and Defects:
* Material Defects:
Known flaws or defects that would affect the outcome of sale.
* All parties must advise if material defects are known as it would directly affect the outcome of the sale or the ________ of value.
Consideration
Property Conditions And Disclosures:
Material Facts and Defects:
* Latent Defects:
Not readily known or visible but materially affects use or value.
* All parties must advise if material defects are known as it would directly affect the outcome of the sale or the consideration of value.
* Parties do not have to disclose LATENT defects as they may not ________ about them.
Known
Property Conditions And Disclosures:
Material Facts and Defects:
* Latent Defects:
o ________ in the ground or old wiring inside the walls can’t be seen. So, this would be something they may not be aware of as a seller.
Radon Gas
Property Conditions And Disclosures:
Material Facts and Defects:
________:
‘Buyer Beware’ philosophy that the buyer is own their own.
Caveat Emptor
Property Conditions And Disclosures:
Material Facts and Defects:
Caveat Emptor:
o No longer true as buyers are not experts in all things and rely on experts to facilitate in the
transactions – thus placing ________ responsibilities on agent.
Fiduciary
Property Conditions And Disclosures:
Agency Specific Disclosures:
* Relationships between agent and client:
o If related or somehow ________, the agency MUST be disclosed in contract.
Interconnected
Property Conditions And Disclosures:
Agency Specific Disclosures:
* Relationships between agent and client:
o Representing a family members or if they have any ________ in a business who is making offer on a home.
Ownership Interest
Property Conditions And Disclosures:
Agency Specific Disclosures:
* Relationships between agent and client:
o ________ is a mandatory disclosure to everyone. This occurs when the agent owns the home.
The general public would be at an unfair advantage in dealing with an agent who does not disclose that they are licensed when selling their own home.
Owner [Agency]
Property Conditions And Disclosures:
Agency Specific Disclosures:
________:
Advertisements for real property where the agent fails to tell the general public that they are a licensed agent.
Blind Ad’s
Property Conditions And Disclosures:
Agency Specific Disclosures:
Blind Ad’s:
The Brokers name (Brokerage who employs agent) MUST be written in the ad in a predominantly displayed manner.
* Brokers ________ is Acceptable.
Logo
Property Conditions And Disclosures:
Agency Specific Disclosures:
Contractual Obligations:
*Agents should never assume the duty of a home inspector, attorney, accountant or any other licensed field.
*Always suggest that clients seek the advice of a ________ professional in that field.
Licensed
Property Conditions And Disclosures:
Agency Specific Disclosures:
Contractual Obligations:
Home or property inspectors are licensed under the governing body of the ________ in Arizona. NOT the ADRE.
Board of Technical Registration (BTR)
Property Conditions And Disclosures:
Agency Specific Disclosures:
Contractual Obligations:
Could be found guilty of a felony by “________”.
Impersonating a Licensed Professional
Property Conditions And Disclosures:
Agency Specific Disclosures:
Contractual Obligations:
Remember: C.C.R.P.
1.
2.
3.
4.
- Contractual Duties and Obligations
- Confidentiality Terms of Offers
- Relationships between Agent and Client
- Price
Property Conditions And Disclosures:
Agency Specific Disclosures:
Contractual Obligations:
* Price:
o Agents are hired to represent their clients in the fairest manner possible.
o Duty to disclose the fair market price is ________ to sellers and the public.
Invaluable[Critical]
Property Conditions And Disclosures:
Agency Specific Disclosures:
Contractual Obligations:
* Price:
Sellers who price their homes too ________ are leaving money on the table.
Low
Property Conditions And Disclosures:
Agency Specific Disclosures:
Contractual Obligations:
* Price:
Sellers who price their homes too ________ face longer then needed selling time, stagnation of listings and eventually a termination of listing agreement.
High
Property Conditions And Disclosures:
Agency Specific Disclosures:
Contractual Obligations:
* Price:
Sellers who price their homes too low are leaving money on the table.
Sellers who price their homes too high face longer then needed selling time, stagnation of listings and eventually a termination of listing agreement.
Liability could be placed on broker for failing to properly ________ property.
Price
Property Conditions And Disclosures:
Agency Specific Disclosures:
Contractual Obligations:
* Confidentiality:
o Clients will discuss things sometimes that are confidential.
o Brokers/Agents need to understand what needs to be ________ confidential.
Kept
Property Conditions And Disclosures:
Agency Specific Disclosures:
Contractual Obligations:
* Confidentiality:
o If it is a “________” of the contract or property, it NEEDS to be shared with the potential buyers.
Material Fact
Property Conditions And Disclosures:
Agency Specific Disclosures:
Contractual Obligations:
* ________:
o Agents should NEVER hurt their clients negotiating position unless they have information that their client may not be able to perform.
Confidentiality
Property Conditions And Disclosures:
Agency Specific Disclosures:
* Terms of Offers:
o Disclosure of another offers terms could affect the outcome of other agents and their clients offers, NEVER disclose ________ offers terms to other parties.
Another
Property Conditions And Disclosures:
Agency Specific Disclosures:
* Terms of Offers:
o Agents are OBLIGATED to share with their sellers that a buyer has the ability to offer ________ than their current offer if they know this.
More
Property Conditions And Disclosures:
Agency Specific Disclosures:
* Terms of Offers:
o You may NOT disclose to another party that your seller would have taken ________ for a listing that you are representing on the purchase price.
Less
Property Conditions And Disclosures:
Agency Specific Disclosures:
* Terms of Offers:
Brokers must share all offers that come in with the seller, even if they are under contract, unless otherwise written to ________ offers.
Seller may want to have backup offers in case the current buyer fails.
Hold
Property Conditions And Disclosures:
* Megan’s Law:
State registration systems to maintain a database of registered ________. Designed to enhance the safety of the neighborhood and it’s residents.
Sex Offenders
Property Conditions And Disclosures:
Megan’s Law:
* Sex offenders are defined as anyone who:
o Kidnaps children.
o Commits sexual crimes against children.
o Or has committed ________ violent crimes.
Sexually
Property Conditions And Disclosures:
Megan’s Law:
* Certain states require licensees to disclose this information to prospective owners/tenants. This disclosure is ________ required in ARIZONA.
Not
Property Conditions And Disclosures:
Megan’s Law:
* Many times, the State will send out ________ to all residents in an area where an offender is to either relocate to or if already living there was convicted a sex crime.
Notices
Property Conditions And Disclosures:
Megan’s Law:
o In ARIZONA:
Licensees DO NOT disclose this information due to the ________ law.
IMPORTANT: May ONLY refer clients to the resources available, i.e.: government websites.
Stigmatized Property Law
Property Conditions And Disclosures:
Quiz:
TRUE or FALSE: Failing to disclose material defects is not enough to pursue a lawsuit against an agent.
True
False
False
Property Conditions And Disclosures:
Planned Unit Development Community Disclosures:
* Sellers of Real Property are required to disclose the existence of an HOA and the known terms of any ________ that are in effect for that community or PUD.
Covenants, Conditions and Restrictions (CC’Rs)
Property Conditions And Disclosures:
Planned Community Disclosures:
o P.U.D. means ________. They have zoning ordinances designed to enhance a general area.
Planned Unit Development
Property Conditions And Disclosures:
Planned Unit Development Community Disclosures:
* Buyers of property located in an HOA maintained community will need to understand the extent of the Covenants, Conditions and Restrictions (CC’Rs), the financial reports of the HOA and the ________ owed.
Assessments
Property Conditions And Disclosures:
Planned Unit Development Community Disclosures:
o H.O.A. means ________.
Home Owners Association
Property Conditions And Disclosures:
Planned Unit Development Community Disclosures:
o C.C.R.’s means ________.
Covenants, Conditions and Restrictions (CC’Rs)
Property Conditions And Disclosures:
Planned Unit Development Community Disclosures:
CCR’s: Covenants, Conditions and Restrictions:
During the inspection periods, escrow companies or sometimes the owners will order and supply buyers with copies of the Covenants, Conditions and Restrictions (CC’Rs), HOA bylaws and rules for review.
* Buyers must ________ and accept that they have had the opportunity to review these documents to proceed with the sale if elected.
Sign
Property Conditions And Disclosures:
Planned Unit Development Community Disclosures:
CCR’s: Covenants, Conditions and Restrictions:
During the inspection periods, escrow companies (sometimes the owners) will order and supply buyers with copies of the Covenants, Conditions and Restrictions (CC’Rs), HOA bylaws and rules for review:
1. The ________ of assessments, and frequency at which they are paid.
Amount
Property Conditions And Disclosures:
Planned Unit Development Community Disclosures:
CCR’s: Covenants, Conditions and Restrictions:
During the inspection periods, escrow companies (sometimes the owners) will order and supply buyers with copies of the Covenants, Conditions and Restrictions (CC’Rs), HOA bylaws and rules for review:
2. What is ________ in the HOA assessments i.e. trash, insurance, pool etc.
Covered
Property Conditions And Disclosures:
Planned Unit Development Community Disclosures:
CCR’s: Covenants, Conditions and Restrictions:
During the inspection periods, escrow companies (sometimes the owners) will order and supply buyers with copies of the Covenants, Conditions and Restrictions (CC’Rs), HOA bylaws and rules for review:
3. Full ________ statements of the HOA and current residents to ensure financial worthiness.
Accounting
Property Conditions And Disclosures:
Planned Unit Development Community Disclosures:
CCR’s: Covenants, Conditions and Restrictions:
During the inspection periods, escrow companies (sometimes the owners) will order and supply buyers with copies of the Covenants, Conditions and Restrictions (CC’Rs), HOA bylaws and rules for review:
4. Any notices of impending ________ of future assessments.
Special Assessments
Property Conditions And Disclosures:
________:
Property which buyers or tenants may shun for reasons that are unrelated to its physical condition or features.
Stigmatized Property
Property Conditions And Disclosures:
Stigmatized Property:
* These can include ________ of an occupant, murder, suicide.
Death
Property Conditions And Disclosures:
Stigmatized Property:
* These can include the belief that a house is ________ or has other spiritual issues.
Haunted
Property Conditions And Disclosures:
Stigmatized Property:
* These can include owners of properties who suffer from serious illness such as ________ are protected, and details of these illness can NOT be shared with parties.
HIV/AIDS
Property Conditions And Disclosures:
Stigmatized Property:
*Refer clients to the ________ – be the source of the source. Not the SOURCE.
Buyers Advisory
Property Conditions And Disclosures:
Agent’s Compensation:
* All compensation paid to a party in a real estate transaction must be made ________ to all.
Public
Property Conditions And Disclosures:
Agent’s Compensation:
* Kickbacks:
A form of payment made to someone who has ________ a transaction.
Facilitated
Property Conditions And Disclosures:
Agent’s Compensation:
Kickbacks:
* Kickbacks are forbidden and illegal, and normally are not ________.
Disclosed
Property Conditions And Disclosures:
Agent’s Compensation:
Kickbacks:
* Commissions and referrals are legal, if licensed at time of contract and ________.
Disclosed
Property Conditions And Disclosures:
Agent’s Compensation:
Kickbacks:
* Commissions and referrals are legal, if licensed at time of contract and disclosed:
o If a firm has a business interest in a 3rd party vendor, this must be disclosed, even if that vendor is not ________ by anyone in the transaction.
Used
Property Conditions And Disclosures:
Agent’s Compensation:
Kickbacks:
* Commissions and referrals are legal, if licensed at time of contract and disclosed:
o If a vendor is paying a referral or commission to anyone, it must be disclosed and appear on the ________.
Settlement Statement
Property Conditions And Disclosures:
Agent’s Compensation:
Kickbacks:
* Commissions and referrals are legal, if licensed at time of contract and disclosed:
o It is ________ to encourage clients to use vendors who pay you as normally those fee’s would be unjustly passed onto the client.
Unethical
Property Conditions And Disclosures:
Agent’s Compensation:
Kickbacks:
* Commissions and referrals are legal, if licensed at time of contract and disclosed:
o It’s recently being argued that affiliate relationships where no compensation is given is being challenged as a form of ‘________’.
Referral
Property Conditions And Disclosures:
Case Study:
What law requires sex offenders to be placed on a list?
Megan’s Law
Property Conditions And Disclosures:
Case Study:
A local hardware store is selling generic red yard signs that say “For Sale” and have an open space for a phone number. Your brother purchases one to sell his home, then calls you and asks if he can put your phone number on the sign to handle phone calls about the property (since you are a real estate agent/expert), but he still wishes to sell FSBO. Can you allow him to do this?
Yes and NO. Representing a family member is legal, but in this case, he asks to be an unrepresented owner or FSBO (for sale by the owner). In this case, you can only provide advice but can NOT mislead the public to think the house is being sold or represented by an agent. So, it’s best to either say no, you can not assist, or to have him agree to a listing, enabling you to place your BROKERAGE sign on the property.
Property Conditions And Disclosures:
Case Study:
What’s the difference between Material Defects and Latent Defects?
Material Defects are the known flaws or defects that would affect the outcome of a sale. While Latent Defects are not readily known or visible, they materially affect use or value.
Property Conditions And Disclosures:
Case Study:
Your client (a seller) needs to disclose a monthly HOA assessment to a buyer who closes on the home. Who can be sued by the buyer?
If you, as an agent (or your broker), knew of an HOA and DID NOT disclose it, that would be a fraud. But, if you did not know about it, only the seller could be sued for failure to disclose a material fact. Here is an example of who knew what, and that is usually the party who is liable.
Property Conditions And Disclosures:
Case Study:
While showing a home in Gilbert, AZ to a client (a buyer), a neighbor comes by to say hello and mentions to your client that the previous owner was a sex offender. Your client then asks you if you can verify this. How would you respond?
Certain states require licensees to disclose this information to prospective owners/ tenants. However, in Arizona, you may only refer clients to the resources available, i.e., government websites, for the details.
Property Conditions And Disclosures:
Quiz:
What is a material fact?
Known flaws or defects that would affect the outcome of the sale
A buyer beware philosophy
Items that are readily visible
Not readily known or visible but material affects use or value
Known flaws or defects that would affect the outcome of the sale
Property Conditions And Disclosures:
Quiz:
All of the following statements except which one are true with regards to disclosures in real estate?
Material Facts Must Disclosed if Known
Seller is liable in Arizona to disclose existence of haunted houses
The house was the site of a natural death years ago
The agent must correct any misconceptions that the buyers may have about the property
Seller is liable in Arizona to disclose existence of haunted houses
Property Conditions And Disclosures:
Quiz:
Which party is ultimately responsible for the discovery of school rankings in a properties’ area?
Listing agent
Escrow/title company
The buyer(s)
The buyer’s agent
The buyer(s)
Property Conditions And Disclosures:
Quiz:
What must a seller’s agent not keep confidential?
Client’s need to sell the home quickly
The death of an occupant in the home
Material facts
Willingness to take a lower offer price
Material facts
Property Conditions And Disclosures:
Quiz:
A cracked foundation covered by carpeting is considered a:
Material fact
Material defect
Latent defect
Caveat emptor
Latent defect
Property Conditions And Disclosures:
Quiz:
A home was once the site of a murder. What law prohibits an agent from disclosing this?
Statute of frauds
Megan’s law
Planned community law
Stigmatized property law
Stigmatized property law
Property Conditions And Disclosures:
Quiz:
Even with disclosure, which of these practices are illegal?
Kickbacks
Commissions
Referrals
Both B and C
Kickbacks
Property Conditions And Disclosures:
Truth in Lending Disclosures:
* _______:
Also known as Regulation Z (Reg Z) required lenders to show the total cost of borrowing money.
Property Conditions And Disclosures:
Truth in Lending Disclosures:
Truth in Lending Act [TILA]:
* Enforced under the _______ and falls under the Consumer Financial Protection Bureau (CFPB).
Frank-Dodd Act
Property Conditions And Disclosures:
Truth in Lending Disclosures:
Truth in Lending Act [TILA]:
* Enforced under the Frank-Dodd Act and falls under the _______.
Consumer Financial Protection Bureau [CFPB]
Property Conditions And Disclosures:
Truth in Lending Disclosures:
Truth in Lending Act [TILA]:
* Reg Z ONLY applies to financing for _______.
Residential Loans
Property Conditions And Disclosures:
Truth in Lending Disclosures:
Truth in Lending Act [TILA]:
* Lenders are required to compute the true cost of borrowing and show it in the _______.
Annual Percentage Rate (APR)
Property Conditions And Disclosures:
Truth in Lending Disclosures:
Truth in Lending Act [TILA]:
* Loan costs, discount points, and _______ are all calculated into the Annual Percentage Rate (APR).
Lender Fees
Property Conditions And Disclosures:
Truth in Lending Disclosures:
Truth in Lending Act [TILA]:
o APR means Annual Percentage Rate:
This is the effective rate of _______ interest on a loan.
Total
Property Conditions And Disclosures:
Truth in Lending Disclosures:
Truth in Lending Act [TILA]:
* Penalties can be severe and include forfeiture of ALL _______ on a loan and up to $1000 PER occurrence or loan where the violation was found.
Interest
Property Conditions And Disclosures:
Advertising and Regulation Z:
* Credit terms that are offered in the advertisement now must be all inclusive to the _______.
Annual Percentage Rate (APR)
Property Conditions And Disclosures:
Advertising and Regulation Z:
* Lenders must disclose in all forms of advertising the ‘_______’ cost of borrowing money by publishing in a clear and evident manner the Annual Percentage Rate (APR).
True
Property Conditions And Disclosures:
Advertising and Regulation Z:
* Advertising Terms that invoke the Reg Z rules are known as _______.
Trigger Terms
Property Conditions And Disclosures:
Advertising and Regulation Z:
* _______:
Then any terms used in advertising that requires full disclosure of Annual Percentage Rate (APR).
Trigger Term
Property Conditions And Disclosures:
Advertising and Regulation Z:
* If any of these terms are used, the lender must disclose the true Annual Percentage Rate (APR):
1.
2.
3.
4.
- Payment Terms
- Interest Rates
- Term, Length or Amount of Payments
- Down Payment
Property Conditions And Disclosures:
Environmental Regulations:
* _______ regulations mandate that the public be made aware of environmental concerns that may impact their safety and well-being.
Federal
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
* Lead-Based Paint:
o This is banned for use in 1978 under the ‘_______’.
U.S. Consumer Product Safety Commission Rule
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
* _______:
o These addendums are used to notify the public that paint may have been used in homes built prior to 1979.
Lead-Based Paint
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
*CERCLA [Superfund] means _______.
Comprehensive Environmental Response Compensation & Liability
Act
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
*Comprehensive Environmental Response Compensation & Liability
Act (CERCLA) [Superfund]:
This act passed in the 1980s to prohibit illegal dumping of _______Chemicals.
Chemicals
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
*Comprehensive Environmental Response Compensation & Liability
Act (CERCLA) [Superfund]:
o Refers to geographic zones in the United States contaminated by hazardous waste and are identified as candidates for cleanup by the _______.
Environmental Protection Agency (EPA)
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
*Comprehensive Environmental Response Compensation & Liability
Act (CERCLA) [Superfund]:
o Public health concerns remain to be impactful on the overall value of affected sites.
o Responsibility for cleanup costs falls on _______ who created or knew about the illegal practices. Homeowners may be held liable for cleanup.
Owners
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
*Comprehensive Environmental Response Compensation & Liability
Act (CERCLA) [Superfund]:
o Sellers and real estate licensees liable for improper or _______.
Non-Disclosure
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
* _______:
o Sites that are in the process of being redeveloped for use by the general public that were once contaminated by chemicals or other waste.
Brownfields
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
* Brownfields:
o Any previously developed land that is not currently in use that may be potentially _______ is also a brownfield.
Contaminated
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
* Water Quality Assurance Revolving Fund (WQARF) Sites:
o Arizona sites where groundwater and/or soil contamination is present and qualify for _______ from Water Quality Assurance Revolving Fund (WQARF).
Funds
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
* _______:
o Arizona sites where groundwater and/or soil contamination is present and qualify for funds from this entity. Location and type of contamination can be found in public databases.
Water Quality Assurance Revolving Fund (WQARF) Sites
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
o _______:
A material of microscopic fibers with highly fire-retardant properties that was once used in certain construction materials, such as insulation, flooring, roofing and other common uses.
o Discovered to cause multiple conditions including cancer, fibromyalgia.
Asbestos
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
* Asbestos:
o Asbestos BAN is an _______ rule enacted in 1989: asbestos no longer manufactured in building materials however asbestos-based materials still in use.
Environmental Protection Agency (EPA)
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
* Asbestos:
o This is used for insulation, “popcorn” ceilings, pipe insulation.
o After discovery and disclosure, professional _______ is required.
Remediation
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
* _______:
o This is a geographic area that is commonly saturated with water that supports a variety of vegetation like a bog, swamp, bayou.
Wetlands and Floodplains
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
* Wetlands and Floodplains:
o State and the federal governments regulate and _______ wetlands, generally under water laws.
Protect
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
* Wetlands and Floodplains:
o Arizona wetlands less than ________% of Arizona land is classified as wetland.
i.e. wetlands projects near Phoenix and Tucson include Tres Rios Wetlands, Sweetwater Wetland Park, and West Wetlands Park.
1%
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
* Wetlands and Floodplains:
o _______:
Expanded federal government’s authority over water resources in the nation – intent was to reduce pollution in waterways, especially where human life or health may be endangered.
Water Quality Improvement Act of 1970
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
* Wetlands and Floodplains:
o _______:
This Act gave the EPA authority to regulate industrial byproducts dumped into waterways, wetlands, and other water resources.
Water Pollution Control Act Amendment 1972 (a.k.a. The Clean Water Act]
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
* Wetlands and Floodplains:
o _______:
This is a geographic area located near a river or stream that is prone to flooding.
Flood Plain
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
* Wetlands and Floodplains:
o _______:
This Act states if building in a flood zones this information must be disclosed to a buyer before the paperwork is signed.
Flood Control Act 1969
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
* Wetlands and Floodplains:
o Seller’s property disclosure from previous _______ inflicted upon a structure must be disclosed in writing to the prospective buyer.
Flood Damage
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
* Wetlands and Floodplains:
o _______:
This Act is under the management of Federal Emergency Management Administration (FEMA).
National Flood Insurance Act of 1968
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
* Wetlands and Floodplains:
o _______:
Provides flood insurance, meant to develop flood plain maps, and enhances management of designated flood plain areas.
National Flood Insurance Act of 1968
Property Conditions And Disclosures:
Environmental Regulations:
* Multiple Federal agencies have mandated disclosures on known issues including:
* Wetlands and Floodplains:
o National Flood Insurance Act of 1968:
Purpose of flood insurance is to protect property owners _______ against water damage.
Financially
Property Conditions And Disclosures:
Environmental Regulations:
Real Life Note:
FEMA retains responsibility for _______ flood insurance coverage.
You can obtain a flood insurance policy from many insurance companies, but FEMA is the actual underwriter. There are more than five million policyholders nationwide providing nearly $1.3 trillion in coverage against flood.
Underwriting
Property Conditions And Disclosures:
Environmental Regulations:
Quiz:
Which of these terms references a location to be saturated with water that supports a variety of vegetation…
River Plain
Wetland
Swamp Plain
Flood Road
Wetland
Property Conditions And Disclosures:
Environmental Regulations:
Study Guide:
What is the purpose of the Truth In Lending Disclosure?
Truth in Lending disclosure, also known as Regulation Z (Reg Z), required lenders to show the total cost of borrowing money.
Property Conditions And Disclosures:
Environmental Regulations:
Study Guide:
A lender advertises “Low-Interest Rates for 30-year mortgages!” on a highway billboard. What else must be put on the billboard? What regulation requires this?
Lenders must disclose in all forms of advertising the ‘true’ cost of borrowing money by publishing it in an evident manner. Advertising Terms that invoke the required Reg Z rules are known as trigger terms.
Property Conditions And Disclosures:
Environmental Regulations:
Study Guide:
Your client is selling a home built in 1974. What additional addendum regarding paint must be given to the buyer?
Lead-based paint was banned for use in 1978 under the U.S. Consumer Product Safety Commission rule. Lead-based paint addendums notify the public that color may have been used in homes built before and including in 1978.
Property Conditions And Disclosures:
Environmental Regulations:
Study Guide:
A home sustained flooding damage in 2005, and the original owner properly repaired and disclosed this, then sold the house to your client. Does your client need to disclose this flooding damage to a new buyer? If so, who besides the seller can be sued for non-disclosure?
Seller’s property disclosure from previous flood damage inflicted upon a structure must be disclosed to the prospective buyer in writing. In the case of nondisclosure, the seller and agent would be responsible.
Property Conditions And Disclosures:
Environmental Regulations:
Quiz:
Which of these terms does not require the lender to disclose true APR on an advertisement?
Payment terms
Interest rates
Customer satisfaction rate
Down payment
Customer satisfaction rate
Property Conditions And Disclosures:
Environmental Regulations:
Quiz:
A seller is aware of asbestos insulation in their attic. What must be done before selling the house?
Nothing required if built before 1989
Disclosure
Blow new insulation on top
Inform the appraiser
Disclosure
Property Conditions And Disclosures:
Environmental Regulations:
Quiz:
What regulation requires lenders to show the total cost of borrowing money?
Planned community law
Statute of frauds
Lender’s code of ethics
Truth in lending
Truth in lending
Property Conditions And Disclosures:
Environmental Regulations:
Quiz:
Home’s built before what year require a lead based paint addendum?
1960
1978
1969
1980
1978
Property Conditions And Disclosures:
Environmental Issues:
* Environmental Laws is managed by the __________:
* A home seller is required to disclose any environmental issues that could reasonably present a problem to future owners.
Environmental Protection Agency (EPA)
Property Conditions And Disclosures:
Environmental Issues:
__________:
Caused by the excessive build-up of moisture in an enclosed location like an attic or inside walls without proper ventilation.
Mold
Property Conditions And Disclosures:
Environmental Issues:
Mold:
o Mold spores need an __________ i.e. (wood), oxygen, and moisture to thrive.
Organic Surface
Property Conditions And Disclosures:
Environmental Issues:
Mold:
o These conditions can lead to mold infestations in a structure can be excessive moisture in interior areas leads to mold.
o Commonly found in areas where __________ accumulates – laundry, baths, kitchens.
Water
Property Conditions And Disclosures:
Environmental Issues:
* __________:
Naturally occurring radioactive gas that can cause lung cancer.
o Caused from the decaying of rocks, you can’t see or smell the gas.
Radon
Property Conditions And Disclosures:
Environmental Issues:
* Radon:
o More common in some parts of the USA. Not common in AZ.
o __________ is required if Radon is known and is an issue.
Disclosure
Property Conditions And Disclosures:
Environmental Issues:
* Radon:
o The EPA may offer __________ assistance to property owners for the remediation of radon, asbestos, or lead-based paint.
Financial
Property Conditions And Disclosures:
Environmental Issues:
* Underground Storage Tanks (UST):
o Prior to the 1980s most USTs were made of bare steel.
o Steel is likely to corrode over time and allow UST contents to __________ into the environment.
Leak
Property Conditions And Disclosures:
Environmental Issues:
* Underground Storage Tanks (UST):
o Hazardous substance can seep into the soil and contaminate __________.
o Leaking UST can present other risks including the potential for fire and explosion.
Groundwater
Property Conditions And Disclosures:
Disclosure/Consumer Protection:
* Disclosures made to the general public that are a __________ and not a health concern but still need to be made aware.
Nuisance
Property Conditions And Disclosures:
Disclosure/Consumer Protection:
* Disclosures made to the general public that are a nuisance and not a health concern but still need to be made aware:
* __________:
o Any type of airport noise, smells or even sights could be a nuisance.
Military Airports and Ancillary Military Facilities
Property Conditions And Disclosures:
Disclosure/Consumer Protection:
* Disclosures made to the general public that are a nuisance and not a health concern but still need to be made aware:
* Military Airports and Ancillary Military Facilities:
o Real estate agents showing properties in Surprise must carry a map showing the Luke AFB __________.
Flight Plans
Property Conditions And Disclosures:
Disclosure/Consumer Protection:
* Military Training Routes and Military Restricted Airspace:
o Military areas where high speed passes, fly overs or simulated __________ activities can take place.
War Time
Property Conditions And Disclosures:
Disclosure/Consumer Protection:
* __________:
These areas must be made known to potential buyers as areas of intense military operations. Always provide Disclosure!
Military Training Routes and Military Restricted Airspace
Property Conditions And Disclosures:
Disclosure/Consumer Protection:
* __________:
o Some owners love the opportunity to live on or near an airport but many people see the coming and going of aviation traffic as a problem.
Public and Private Airports
Property Conditions And Disclosures:
Disclosure/Consumer Protection:
* __________:
o Soil that tends to strain a home’s foundation because the ground shrinks and swells, according to changing levels of moisture is a disclosure.
Expansive Soils [Shrink Well]
Property Conditions And Disclosures:
Disclosure/Consumer Protection:
* __________:
o These are shown on maps printed by Arizona Geological Survey. As a realtor you would want to make this available to potential buyers.
Fissures
Property Conditions And Disclosures:
Disclosure/Consumer Protection:
* Fissures:
o __________:
The gradual caving in or sinking of an area of land. The shrinking of the soil is due to the groundwater being used and not replaced. This is the direct reason causing the fissures.
Subsidence
Property Conditions And Disclosures:
Disclosure/Consumer Protection:
* __________:
o Cows and Dairy farms can carry smells for miles even if they are not readily available to see, smells can carry.
Farms and Ranches
Property Conditions And Disclosures:
Disclosure/Consumer Protection:
Quiz:
What are some of the required disclosures that must be made to the general public?
Nuisances such as airport smells, noise and sight.
Owners living near military training routes are susceptible to ground shocks and high speed passes.
Cows and Dairy farms smells may carry for miles which must be disclosed.
Full disclosure of pros and cons living near an airport is not necessary.
Nuisances such as airport smells, noise and sight.
Owners living near military training routes are susceptible to ground shocks and high speed passes.
Cows and Dairy farms smells may carry for miles which must be disclosed.
Property Conditions And Disclosures:
Disclosure/Consumer Protection:
Case Study:
Your client (a seller) is selling a home in an agricultural area covered with dairy farms. What information would need to be disclosed to potential buyers?
Disclosures made to the general public that are a nuisance and not a health concern still need to be made aware. Cows and Dairy farms can carry smells for miles even if they are not readily available to see; scents can have. It must be disclosed.
Property Conditions And Disclosures:
Disclosure/Consumer Protection:
Case Study:
How would you, as an agent, determine if the home your client was selling was near an airport?
Real estate agents showing properties in Surprise must carry a map showing the Luke AFB flight plans to determine if the home your client is selling is near an airport.
Property Conditions And Disclosures:
Disclosure/Consumer Protection:
Case Study:
What environmental issue with a home would have needed to be disclosed?
A home seller must disclose any environmental issues that could reasonably present a problem to future owners—for example, Mold and Radon.
Property Conditions And Disclosures:
Disclosure/Consumer Protection:
Case Study:
What is a fissure, and what causes them to form?
As shown on maps printed by the Arizona Geological Survey, Fissures would want to be made available to potential buyers. Subsidence is the shrinking of the soil due to groundwater being used and not replaced. This is the direct reason behind the fissures.
APR and Interest Rates Math:
What’s more important? __________ vs ___________ is a question you should ask your clients when they are looking for homes to purchase. To
be able to calculate payments is a must in the field. These example questions will help you understand how to calculate APR and payments for your clients. There are two types of questions, those that have PITI
(budget loan) and those that have just principal and interest loans. Make sure you read the questions!
Payment vs Price
APR and Interest Rates Math:
The Hood Family just bought a new home in Sherwood Forest and got a loan that includes: principal, interest, taxes and insurance in one monthly payment. Their total payment is $2150 per month. Their taxes are $3200 for the year and insurance is $1000 for the year. What amount of their monthly loan is going towards taxes and insurance and what is being applied towards their principal and interest
- $3,200 taxes + $1,000 insurance = $4,200 yearly taxes and insurance
- $4,200 ÷ 12 = $350/month
- $2,150 -$350 = $1,800
o $350 to taxes/insurance and $1,800 to principal/interest
APR and Interest Rates Math:
Find the principal amount that will be applied to the loan balance from the next monthly
payment assuming a 30 year fixed interest rate loan for $300,000 at a 4.5% interest rate and a
payment of $1520 that includes only principal and interest (non-budget loan).
- $300,000 x .045 (4.5%) = $13,500 Annual Interest
- $13,500 ÷ 12 = $1,125 Monthly Interest
- $1,520 - $1,125 = $395 Principal Amount
o $395 applied
APR and Interest Rates Math:
The December 1st payment is made on John’s home. His payment is $918 and his original loan balance is $145,000 with an interest rate of 5.375%. Assuming he currently owes $139,412 what will his loan balance be after this payment is applied?
- $145,000 x .05375 = $7,794 Annual Interest
- $7,794 ÷ 12 = $649 Monthly Interest
- $918 - $649 = $269 Principal
- $139,412 - $269 = $139,143
o $139,143 loan balance remaining
APR and Interest Rates Math:
Eileen has a tax bill of $982 and her insurance policy is $618. She has a package loan that pays her taxes and insurance on her behalf and her monthly payment is $740. What amount is Eileen paying towards principal and interest?
- $982 taxes + $618 insurance = $1,600
- $1,600 ÷ 12 = $133.33 (amount per month going towards her taxes and insurance)
- $740 -$133.33 = $606.67
o $606.67 is her principal and interest.
APR and Interest Rates Math:
Using that example from above, if we know that $113.67 went to principal that month and her loan amount is $85,500, what is her interest rate?
- $606.67 P&I - $113.67 Principal = $493 Interest on the Loan
- $493 x 12 months = $5,916
- $5,916 ÷ $85,500 = .0692 or 6.92%
o 6.92% interest rate
APR and Interest Rates Math:
Renee has a payment of $1720/month. Find the loan balance after making 3 monthly payments. Beginning loan amount is $231,000. Interest rate is 8% for a 30 year loan
- $231,000 x .08 = $18,480 Annual Interest
- $18,480 ÷ 12 = $1,540 Monthly Interest
- $1,720 - $1,540 = $180 Principal
o $231,000 - $180 = $230,820 New Balance at the beginning of month 2 - $230,820 x .08 = $18,465.60
- $18,465.6 ÷ 12 = $1538.80 Monthly Interest
- $1,720 - $1,538.80 = $181.20 Principal
o $230,820 – $181.20 = $230,638.80 New Balance at the beginning of month 3 - $230,638.80 x .08 = $18,451.10
- $18,451.10 ÷ 12 = $1,537.60 Monthly Interest
- $1,720 - $1,537.60 = $182.41 Principal
- $230,638.80 - $182.41 = $230,456.39
o $230,456.39 new balance at the beginning of month 4
APR and Interest Rates Math:
Mother Hubbard lives in suburbia estates. The same model house down the street just sold $295,000 and another house, 5% smaller in size but with a pool sold for $280,000. According to her mortgage statements, she paid $14,880 in annual interest for her home last year. She was thinking about refinancing her rate from 5.5%. What is her loan amount?
- $14,880 (annual interest) ÷ .055 (5.5%) = $270,545
- Ignore the noise and the loss misleading data that you don’t need.
o Her loan amount is $270,545
APR and Interest Rates Math:
What is the first year’s interest on a mortgage for $200,000 at 6% interest for 30 years?
- $200,000 (Amount of Mortgage) x 0.06 (Interest Rate) = $12,000
- Put into the “T” the loan balance is the bigger # and the Rate was provided, so we need to find the smaller #
APR and Interest Rates Math:
A 20-year mortgage at 5.5% carries a monthly payment of $6.60 per thousand. What is the total monthly payment for a $275,000 mortgage?
- $275,000 ÷ $1,000 = 275 units (or cost) of $1,000 each
- 275 x $6.60 (Payment per Thousand) = $1,815 per month
**This is common for borrowers to understand how much money it is going to cost them per every
$1000 that the either borrow or pay out of pocket for. In this case, every $1000 that a borrower puts
down on the down payment would reduce their loan payments by $6.60. So if they put $10,000 down, it
would save them $66.00/month - OR, if they bought a house that was $10,000 more, then that house
would cost them $66.00 more per month.
APR and Interest Rates Math:
Banker Bill loaned Lilly $25,000 to redo her kitchen. The terms were 6% interest only loan with a duration of 10 years. What was the total interest Banker Bill would receive if Lilly only
used 4 years to pay back the loan?
- $25,000 x .06 = $1500 interest per year
- $1500 interest per year x 4 year = $6,000 in interest
APR and Interest Rates Math:
What would the difference be in your interest payments if your lender originally quoted you 8% and then rates changed and are now 8 ¾? The loan would be for $330,000.
- $300,000 x .08 = $24,000 in interest over the year
- $300,000 x .0875 = $26,250 in interest over the year
- $26,250 - $24,000 = $2,250 in extra interest at the higher rate
o $2,250
