# PSI Exam Prep: Real Estate Calculations Flashcards

1
Q

How do you find the Loan-to-value ratio?

A

LTVR = (loan amount ÷ value) × 100.

2
Q

Sue is selling her house for \$265,000. Closing is set for June 19, and Sue owns the day of closing. She has a loan balance of \$78,000 at a 4.2% rate, and she’s current on her payments. She prepaid the property taxes (\$1,350) and insurance (\$925). Using a calendar-year proration method for calculations, how will these amounts appear on Sue’s closing statement?

A

ax daily rate: (\$1,350 ÷ 365 = \$3.70) 195 days (days from closing until year end) = a \$721.50 seller credit. Any prepaid seller’s homeowners insurance will be refunded to the seller outside closing, so this doesn’t appear on the closing statements.

3
Q

Henry submits an offer on a condo and includes an earnest money check for 10% of his offer, which the seller accepts. Later on at closing, he brings a cashier’s check for \$34,450 (comprising the remaining half of his 20% down payment and \$7,950 in closing costs). What’s the condo’s purchase price in whole dollars?

A

Subtract the closing costs from cashier’s check amount (\$34,450 – \$7,950=\$26,500) for half of down payment. The total DP was double this (\$53,000). Next, divide \$53,000 by 20% (to find purchase price (\$53,000 ÷ .2=\$265,000). Purchase price is \$265,000.

4
Q

The assessed value for your buyer clients’ new purchase is \$209,000. They feel they got a great deal since they’re purchasing the property for \$175,000. They’ve asked you to estimate their monthly property taxes. You know the rate for their jurisdiction is .52%. What is the monthly tax amount your clients owe?

A

Multiply the assessed value by the tax rate and divide by 12 to calculate monthly taxes: \$209,000 × .52% = \$1,086.80, and \$1,086.80 ÷ 12 = \$90.57.

5
Q

A real estate transaction has a closing date of May 20. The seller, who’s responsible for closing costs up to but not including the day of settlement, has already paid annual property taxes of \$1,949. Using calendar year proration, the seller will be ______ on the closing statement (round to the nearest dollar).

A

The seller is required to pay the for January 1 through May 19. The seller will be credited \$1,207, because \$1,949 ÷ 365 = \$5.34, and \$5.34 × 226 days (the number of days the buyer is required to pay) = \$1,206.84. That’s \$1,207 if rounded to the nearest whole dollar.

6
Q

When doing taxes calculations.. always use

A

Assess value and appraisal value