Unit 5 North Carolina Property taxes and Settlement

Question 1

An amount charged to a party to pay a bill is a:

Answer 1

Debit

Question 2

The place where a broker holds money belonging to other parties is the:

Answer 2

Trust account

Question 3

An amount of 1$ per $500 of purchase price charged when a deed is recorded is called the:

Answer 3

Excise tax

Question 4

The final settlement created by the terms of the Offer to Purchase and Contract is called:

Answer 4

Closing

Question 5

A place where a lender holds a borrower’s funds to pay bills at a later time is a:

Answer 5

Lender/ Escrow account

Question 6

Who owns the day of settlement

Answer 6

Seller

Question 7

For the test, all prorations will have how many days in a month and how many days in a year?

Answer 7

30 day month / 360 day year

Question 8

Paid in arrears means:

Answer 8

buyer will pay in the future

Question 9

Real Property is assessed every:

Answer 9

8 years

Question 10

In NC Property Taxes attach to the property as of 1 Jan and are due and payable:

Answer 10

September 1st

Question 11

The settlement is created by the :

Answer 11

Offer to Purchase and contract

Question 12

brokers who fail to attend the closing settlement may in violation of their _______ duties to the client.

Answer 12

Fiduciary

Question 13

The North Carolina Good Funds Settlement Act requires that the deed and deed of trust be recorded before what?

Answer 13

Funds may be disbursed

Question 14

True or False

Excise Tax is rounded down

Answer 14

False

Excise tax is always rounded up

Question 15

Proration formula :

Answer 15

Total Bill / days in the billing period x days owed

Question 16

If one party receives a credit the other party must receive:

Answer 16

an equal amount as a debit

Question 17

Brokers commission formula:

Answer 17

Sale price x commission rate = total commission

Question 18

Buyers Loan origination fee formula:

Answer 18

Loan amount x Fee (1%)= LOF

Question 19

Interim interest is:

Answer 19

Loan interest paid from the day of closing to the end of the month. ( never more than 30 days)

Question 20

Escrow Account Deposit Formula:

Answer 20

EXAMPLE: 4 months real property taxes;

TAXES / 12mo = tax per mo x 4 = 4 mo tax

Question 21

Mortgage insurance (PMI) formula:

Answer 21

EXAMPLE: 2month mortgage insurance;

Loan x rate= PMI (yr) / 12 mo= PMI mo x 2mo= 2mo PMI

Question 22

True or False

Seller must pay for a pest inspection on a VA loan.

Answer 22

True

Question 23

________ are responsible for reviewing the settlement statement for accuracy for the party they represent.

Answer 23

Brokers

Question 24

by Law in NC the assessed value of property must equal:

Answer 24

market value

Question 25

What is the entry for a loan assumption balance?

Answer 25

debit the seller, credit the buyer

Question 26

Which party normally pays for the recording of the warranty deed?

Answer 26

Buyer