ch 22-25

Question 1

What is the formula for computing simple interest

Answer 1

interest = principal x rate x time

Loan will be paid in 12 equal monthly installments. The first months interest will be computed on the full loan amount. However the second month’s interest will be computed on the new loan balance, which is the original balance minus the monthly principal. Simple interest is only calculated on the remaining loan balance

Question 2

what are points

Answer 2

they represent prepaid interest and the lender charges them to get additional income on the loan. Points are paid at closing and are usually equal to 1 percent of the loan amount

Question 3

what are origination points

Answer 3

lenders charge these to recover some costs of the loan origination process. In many cases, a loan officer’s compensation is based on the origination points. Depending on the lending institution, the origination points may be negotiable.

Question 4

what are discount points

Answer 4

these charges are designed to offset any losses the lender might suffer when selling the loan to the secondary mortgage market. Discount points are a mens of raising the effective interest rate of the loan.
The rule of thumb is 1/8 percent for each discount point. So a charge of 4 points would increase a 7.25 percent mortgage to a 7.75 percent yield.
4 points x 1/8 = 4/8 = .5%
7.25% + .5% = 7.75%

Question 5

describe mortgage payments for a loan that is $90k, rate is 5.75% a year, monthly payment is 525.22.

Answer 5

90,000 x .0575 = 5,175 yearly interest due
5,175 / 12 = 431.25 first month’s interest
525.22-431.25 = 93.97 first month’s principal

second month mortgage payment
current loan balance: 90,000-93.97 = 89,906.03
89,906.03 x .0575 = 5169.6 yearly interest
5,169.6 / 12 = second month’s interest
525.22 - 430.8 = 94.42 second month’s principal

Question 6

what is an acre

Answer 6

is approximately 43,560 square feet

Question 7

what is an hectare

Answer 7

is a metric measurement. it is equal to 10,000 square meters or 2.47 acres

Question 8

what is an income ratio

Answer 8

establishes the borrower’s capacity to pay the loan by limiting the percent of gross income he or she may spend on housing costs.
Gross income: total income before deduction
Net income: is the gross income minus expenses
Conventional loans typically require this ratio to be under 28%. FHA require it to be no more than 29%

Question 9

what is debt ratio

Answer 9

all debt payments for other items owner has. Conventional loans usually require the debt ratio be 36% or lower, but FHA guidelines state the debt ratio may not be greater than 41%

Question 10

how to calculate income ratio and debt ratio, want to purchase a home for $92k
Total amount of new monthly payment $900
Gross monthly income: 4,000
Total monthly recurring debt 725

Answer 10

income ratio: 900/4,000 = 22.5%
debt ratio:
total monthly debt = 900 + 725 = 1,625
debt ratio = 1,625/4,000 = 40.62%

Question 11

what is real property transfer tax

Answer 11

sellers musts pay a transfer tax when they sell their property. The tax is based on the purchase price of the property, except if part of the loan is assumed. In that case, the amount of the assumption is subtracted from the purchase price and the tax calculation is done on the remainder. The amount of the tax is $4.00 per $1,000 of purchase price or .4%

Question 12

what is mortgage recording tax

Answer 12

mortgages that are recorded in NY are assessed a mortgage recording tax. The tax is made up of several taxes added together and are based on the taxes that are in effect in the county or city where the property is located. The minimum tax rate is between .75% and 2.75% of the amount secured by the mortgage

Question 13

what is the real property tax rate

Answer 13

the tax is based on the value of the property. The amount of a particular property’s tax bill is determined by two things: the property’s taxable assessment and the tax rates of the taxing jurisdiction in which the property is located.
Assessed value x tax rate = annual taxes

Question 14

What are the different incorporated municipalities in NYS

Answer 14

cities, villages, and towns

The county is the primary administrative division of NYS. In NYS, a city is a highly autonomous incorporated area usually contained within a county. A town is the major division of each county. A village is an incorporated area, most of which are within a single town. An unincorporated populated area within a town that is not part of a village is a Hamlet

Question 15

what does the city council do

Answer 15

sets policies, approves budgets, determines tax rates, and passes ordinances and resolutions to govern the city. The NYC council is the lawmaking body of the City of NY. The council is an equal partner with the Mayor in the governing of NYC. Head is the speaker

NYS constitution mandates that each town have an elected town council, known as a town board. The town board serves as the legislative body of the town. Comprised of a town supervisor and town council members

Question 16

what is a village board of trustees

Answer 16

is made up of the mayor and a group of trustees who are all elected officers. Village boards manage their business in much the same way as town board do

Question 17

what is the main difference between a city and a village

Answer 17

cities are organized and governed according to their charters, which can differ widely among cities, while villages are subject to a uniform statewide village law

Question 18

a county or local board, often called a zoning board of appeals, administers zoning ordinances. A zoning board generally deals with such issues and appeals as..

Answer 18

interpret zoning ordinances
nonconforming use
Variances
Special exception or conditional use permits
Zoning amendments

Question 19

what is an architectural review board

Answer 19

acts to preserve existing areas of natural beauty and cultural importance. The board also acts to assure that buildings, structures, signs or other developments are in good taste, have good design and are harmonious with surrounding developments

Question 20

what is the conservation advisory council

Answer 20

typically advises its local govnt on the development, management and protection of its natural resources. Oversees environmental projects
In some municipalities (such as NYS dept of Environment), the local government is instrumental in watching over the activities that take place near or in the wetlands located within their own municipality

Question 21

what are historic preservation commissions

Answer 21

some communities have adopted ordinances that set up historic preservation commissions whose mission is to identify and protect historic landmarks

Question 22

list four responsibilities of a planning board

Answer 22

Manage and enforce the master plan
Approve site plans and subdivision plans
Approve building permits
Rule on zoning issues

Question 23

what does designation as an interior landmark mean

Answer 23

Designation as an interior landmark means that a building may have special hangings, sculptures, railings and/or ceiling panels that warrant preservation

Question 24

what does building departments do

Answer 24

they enforce the code restrictions and require contractors to be licensed and insured. In NY, the NY Uniform Fire Prevention and Building Code provides the minimum standards for all residential and commercial buildings in NY
Provide approvals for building permits, which give permission for the construction or renovation of a building or improvement
Oversee compliance to the buildings codes

Question 25

what is a tax assessor

Answer 25

is an official who evaluates property for the purpose of taxing it. The Real Property Tax Law requires all properties in each municipality (except in NYC and Nassau County) to be assessed at a uniform percentage of market value each year

Question 26

what is the receiver of taxes

Answer 26

is a tax collector in towns of the first class. May be responsible for collecting one or all of the the following: General property taxes, including levies for the town, county, fire district and other special districts School taxes Unpaid water bills Sewer rentals Permit fees In villages a treasurer receives the taxes NYC commissioner of finance collects real property taxes

Question 27

what is a city engineer

Answer 27

appointed by the mayor of a city to supervise engineering work under the direction of the commissioner of public works. Important function is to estimate costs of road and sidewalk construction. Town engineers are typically appointed by the town board and must be licensed professionals

Question 28

what does the NY Public Health Law provide

Answer 28

provides for the creation and operation of Dept of Health and other health boards in counties, cities, and villages. The makeup of the board of health usually depends on the size of the city , town, or village Cities that have less than 50,000 people usually have a board of health consisting of the mayor and 6 other people. The mayor is the president of the board and at least one other member must be a doctor who is appointed by the city council In towns the board of health consists of the village's board of trustees In villages, the board of health is made up of the town board Local county health departments cooperate with the NYS Dept of Health The NYC Dept Of Health and Mental Hygiene is an 11 member Board of Health appointed by the mayor with the consent of the City Council. A commissioner of Health heads the board A local health dept typically performs the following functions: Estimates the costs to pave roads and sidewalks Estimates the costs to install sewers and other public works projects Supervises streets and public works activities Issues permits to private contractors for street openings and construction of curbs and gutters Approves septic systems

Question 29

what is a monoline insurance policy

Answer 29

it contains only one type of coverage, such as liability insurance

Question 30

what is a package insurance policy

Answer 30

it includes several different types of coverage such as property insurance and liability insurance

Question 31

what does property insurance usually cover

Answer 31

Fire, windstorm, hail, tornadoes, vandalism, smoke damage, and other physical damage to the owner's home or belongings Theft of the owner's personal property Injury of a person on the owner's property due to the negligence of the property owner or a member of the owner's family Damage caused by the policyholder to another's property as a result of neglegence

Question 32

what is homeowners-1 (HO-1) Basic Policy

Answer 32

``` protects against Fire, lightning and smoke damage Burglary and theft Explosion Glass breakage Vehicle or aircraft damage Riot and civil damage Vandalism and malicious mischief Bodily injury Damage to property of others Civil judgement Medical payments Personal property (at home) Personal property (away) Additional living expense (if forced to live away from home temporarily) ```

Question 33

what is homeowners-2 (HO-2) Broad Form Policy

Answer 33

same protection as basic policy plus the following: Falling objects Weight of ice, snow or sleet Accidental discharge or overflow of water from plumbing systems Freezing of plumbing systems Electrical damage to appliances Rupture of water heaters and heating systems Accidental discharge or overflow of water from an automatic sprinkler system

Question 34

what is homeowners-3 (HO-3) Special Form Policy

Answer 34

This policy covers the owner's property for all risks of physical loss, except those that are specifically excluded, such as floor or earthquake

Question 35

what is homeowner-5 (HO-5) Comprehensive Form Policy

Answer 35

protects a home against the same perils as the Special Form Policy plus the owner's personal possessions

Question 36

what the the homeowners-8 (HO-8) Market Value Policy

Answer 36

is a modified version of the Basic Policy, providing actual cash value coverage in place of replacement cost coverage for a building

Question 37

what is tenants or Cooperative Owners Policies (HO-4) and Condominium Unit Owners Policies (HO-6)

Answer 37

are policies that insure against damage to the contents of the apartment, cooperative or condominium and for personal liability of the insured when people are injured or suffer property damage in the insured unit

Question 38

A personal article insurance floater

Answer 38

can insure expensive jewelry and other things separately

Question 39

what is an umbrella policy

Answer 39

type of liability insurance available to individuals and companies to protect them against claims above and beyond the amt covered by their primary policies or for claims not currently covered

Question 40

what is actual cash value

Answer 40

also known as market value, is the standard that insurance companies prefer when reimbursing policy holders for their losses. Actual cash value is equal to the replacement cost minus any depreciation Coverage for contents is usually issued on an actual cash basis in homeowner's and tenant's policies

Question 41

what is replacement cost

Answer 41

means the cost to replace the property on the same premises with other property of comparable material and quality used for the same purpose. The replacement cost of a home must be estimated at the time the property owner takes out a homeowner's policy

Question 42

what is the NY Property Insurance Underwriting Association

Answer 42

is a pool of all insurance companies writing fire insurance in NYS. It offers fire and extended coverage, as well as coverage for vandalism, malicious mischief, and sprinkler leakage to consumers who are unable to purchase this type of insurance from individual insurance companies

Question 43

how could a homeowner be reimbursed if he or she had an actual cash value policy

Answer 43

the homeowner would receive an amount equal to the replacement cost minus any depreciation. It represents the dollar amount an owner could expect to receive for an item if he or she sold it in the marketplace

Question 44

what type of policy would pay a homeowner for the full cost of the repair or replacement without deduction for depreciation

Answer 44

a replacement cost policy which insures the home for at least 80% of its replacement cost

Question 45

as a rule how is coverage for home computers usually handled

Answer 45

home computers used for personal use are subject to the limit available for personal property. Some companies may have a separate limit for the home computer. However, if they used for business, the company will only pay up to $2,500

Question 46

where can property owners purchase flood insurance

Answer 46

through the National Flood Insurance Program if they reside in a community which has been designated as a special flood hazard area which implements and enforces measures to reduce future flood risks

Question 47

what is the coastal market assistance program (C-MAP)

Answer 47

is a voluntary network of insurers that assists NY homeowners who live in coastal areas to find insurance. Before applying to C-MAP, except for new purchases, a homeowner must have received a nonrenewal, cancellation, or conditional non-renewal notice from their existing insurer for a reason other than non-payment of premium

Question 48

how long does an insurance company have to cancel a homeowners or tenants policy

Answer 48

60 days it is in effect as long as the cancellation notice states the specific reason or reasons for the cancellation

Question 49

what factors affect the cost of homeowners insurance premiums

Answer 49

Location Age and type of building The use of the building, such as residence and/or commercial enterprise Local fire protection Choice of deductibles Application of discounts Scope and amount of insurance coverage purchased

Question 50

what does property taxes are levied on an ad valorem basis mean

Answer 50

it means that they are based on the assessed value of the property, which is a percentage of its fair market value

Question 51

what kind of construction projects might trigger a property's reassessment "off schedule?"

Answer 51

renovations that might increase the value of the property, such as finishing a basement into a family room or other living quarters, adding a garage or installing an in-the-ground swimming pool

Question 52

what is a tax certificate

Answer 52

The document issued to a person as a receipt for paying delinquent taxes on a property owned by another, entitling the person to receive a deed to the property if the property is not redeemed within a certain period of time

Question 53

what is the tax levy

Answer 53

is the amount of money the municipality must raise through the property tax

Question 54

what is an equalization program

Answer 54

the NYS Office of Real Property Services (ORPS) is compelled by statute to administer this program in order to assure fair property tax allocation among its taxing jurisdictions and to insure the proper allocation of State Aid to Education funds. Smooths out wide discrepancies of assessed values with in the district The Real Property Tax Law requires that State equalization rates be established annually for each county, city, town, and village. Determines at what percent of market value different municipalities are assessing

Question 55

what is special assessment

Answer 55

is a tax levied against specific properties that will benefit from a public improvement. The assessment creates a specific lien against the property until it is paid

Question 56

what are some real property exemptions

Answer 56

Veterans Low-income senior citizens Farmers Clergy and non-profit educational, religious and charitable organizations

Question 57

each year state law requires assessors to sign an oath that states what

Answer 57

the community assessments represent a uniform percentage of market value

Question 58

why is equalization necessary in NY

Answer 58

There is no fixed percentage at which property must be assessed Not all municipalities assess property at the same percentage of market value Taxing jurisdictions, such as most school districts, do not share the same taxing boundaries as the cities and towns that are responsible for assessing properties

Question 59

how often must equalization rates be established

Answer 59

the real property tax law requires that state equalization rates be established annually for each county, city, town and village

Question 60

what is the STAR program

Answer 60

STAR is NYS's school tax relief program that includes a school property tax rebate program and a partial property tax exemption from school taxes

Question 61

whose property is eligible for the alternative veterans exemptions

Answer 61

the alternative veterans exemption is available only for residential property of veterans who served during wartime or received a medal

Question 62

what does the senior citizens exemption do

Answer 62

it reduces the taxable value of residential property owned by qualifying seniors by 50%

Question 63

what is homestead tax exemption

Answer 63

offers tax relief on owner's principal resident

Question 64

what are the two levels of formal review

Answer 64

Administrative review via the grievance process conducted in each assessing unit Judicial review via a Supreme Court trial or Small Claims Assessment Review In order to pursue judicial review a taxpayer must first go through administrative review ``` The grounds for assessment review in NY are: Unequal assessment Excessive assessment Unlawful assessment Misclassification ``` If property owner is delinquent in paying his or her taxes, the taxing jurisdiction can impose a tax lien against the property

Question 65

what are the possible outcomes of an administrative review

Answer 65

Full denial Full reassessment of the property Partial reassessment of the property

Question 66

who is eligible to avail themselves of the Small Claims Assessment Review

Answer 66

The Small Claims Assessment Review (SCAR) is only available to owner-occupants of one, two or three family dwellings which are used exclusively for residential purposes, or the owners of vacant land that is not of sufficient size to contain a one, two or three family dwelling

Question 67

what if a taxpayer is not satisfied with the decision of the SCAR hearing officer, what options does he or she have

Answer 67

His or her only option is to commence an Article 78 proceeding. Persons who file for a small claims assessment review waive their rights to a tax certiorari proceeding in the state Supreme Court

Question 68

who may and who may not represent a taxpayer in a tax certiorari proceeding

Answer 68

A taxpayer can be represented by an attorney or may represent himself or herself, but may NOT designate a non-attorney to represent him or her in an Article 7 proceeding as is possible in an administrative review

Question 69

what is an in rem legal proceeding

Answer 69

a lawsuit or other legal action directed toward property, rather than toward a particular person. Thus, if title to property is the issue, the action is "in rem." The term is important since the location of the property determines which court has jurisdiction and enforcement of a judgment must be upon the property and does not follow a person. "In rem" is different from "in personam," which is directed toward a particular person. Read more: http://dictionary.law.com/default.aspx?selected=978#ixzz44ylcvCsX

Question 70

What is a tax certiorari proceeding

Answer 70

is the legal process by which the courts review a real property assessment. Generically speaking, it encompasses the entire assessment review process from filing a grievance complaint with the local Board of Assessment Review through judicial review of the assessment.