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Real Estate Principles & Practices Final Exam Questions and Answers, Exams of Real Estate Management

A comprehensive set of questions and answers covering key concepts in real estate principles and practices. it's ideal for students preparing for a final exam, offering a valuable review of topics such as mortgages, deeds, property taxes, and agency relationships. The questions test understanding of legal aspects, financial calculations, and practical applications within the real estate field. This resource is particularly useful for students seeking to solidify their knowledge before an assessment.

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2024/2025

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REAL ESTATE PRINCIPLES & PRACTICES FINAL EXAM
QUESTIONS AND CORRECT ANSWERS
"A buyer has just made the final payment on his mortgage loan to his bank. The buyer will regain
his full legal title once what is recorded? - CORRECT ANSWER Satisfaction of mortgage"
"A builder built a structure with six stories. Several years later, an ordinance was passed in that
area banning any building higher than four stories. The building should be allowed to continue in
its existing state because of a - CORRECT ANSWER nonconforming use."
"In funding a loan that is secured by a residence, the lender is required to disclose all costs
involved in obtaining the financing. This consumer protection is provided by the - CORRECT
ANSWER Truth in Lending Act."
"Which of the following contains no warranties at all and may convey no title at all, depending on
the grantor's interest in the property when the deed is executed? - CORRECT ANSWER
Quitclaim deed (The quitclaim deed (nonwarranty deed) provides the grantee with the least
protection of any deed. It carries no covenant or warranties and conveys only such interest, if any,
that the grantor may have when the deed is delivered.)"
"Police power does NOT include - CORRECT ANSWER deed restrictions (Police powers
include planning, zoning, subdivision regulations, building codes, and environmental protection
legislation. Police power does not include deed restrictions."
"Novation - CORRECT ANSWER Substituting a new obligation for an old one or substituting
new parties to an existing obligation."
"he principle that is the basis for the sales comparison approach is the principle of - CORRECT
ANSWER substitution"
"The National Do Not Call Registry - CORRECT ANSWER is a list of telephone numbers from
consumers who have indicated their preference to limit the telemarketing calls they receive."
"Which tax advantage is NOT associated with owner-occupied personal dwellings? - CORRECT
ANSWER Ability to depreciate the property"
"All these freehold estates can pass by inheritance - CORRECT ANSWER The types of
freehold estates that can be transferred include: fee simple estate (can pass by inheritance);
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REAL ESTATE PRINCIPLES & PRACTICES FINAL EXAM

QUESTIONS AND CORRECT ANSWERS

"A buyer has just made the final payment on his mortgage loan to his bank. The buyer will regain

his full legal title once what is recorded? - CORRECT ANSWER Satisfaction of mortgage"

"A builder built a structure with six stories. Several years later, an ordinance was passed in that area banning any building higher than four stories. The building should be allowed to continue in

its existing state because of a - CORRECT ANSWER nonconforming use."

"In funding a loan that is secured by a residence, the lender is required to disclose all costs

involved in obtaining the financing. This consumer protection is provided by the - CORRECT

ANSWER Truth in Lending Act."

"Which of the following contains no warranties at all and may convey no title at all, depending on

the grantor's interest in the property when the deed is executed? - CORRECT ANSWER

Quitclaim deed (The quitclaim deed (nonwarranty deed) provides the grantee with the least protection of any deed. It carries no covenant or warranties and conveys only such interest, if any, that the grantor may have when the deed is delivered.)"

"Police power does NOT include - CORRECT ANSWER deed restrictions (Police powers

include planning, zoning, subdivision regulations, building codes, and environmental protection legislation. Police power does not include deed restrictions."

"Novation - CORRECT ANSWER Substituting a new obligation for an old one or substituting

new parties to an existing obligation."

"he principle that is the basis for the sales comparison approach is the principle of - CORRECT

ANSWER substitution"

"The National Do Not Call Registry - CORRECT ANSWER is a list of telephone numbers from

consumers who have indicated their preference to limit the telemarketing calls they receive."

"Which tax advantage is NOT associated with owner-occupied personal dwellings? - CORRECT

ANSWER Ability to depreciate the property"

"All these freehold estates can pass by inheritance - CORRECT ANSWER The types of

freehold estates that can be transferred include: fee simple estate (can pass by inheritance);

defeasible fee estate (can pass by inheritance); pur autre vie estate (can pass by inheritance), and ordinary conventional life estate with remainder or reversion (does not pass by inheritance)." "Which of the following items are NOT usually prorated between the seller and buyer at closing?

CORRECT ANSWER Tenant security deposits"

"The market value of a parcel of land is - CORRECT ANSWER an estimate of the present

worth of future benefits." "A seller wants to net $72,000 on the sale of his home. He has agreed to pay a brokerage commission of 6%. What is the minimum sales price that will ensure that the seller will net his

$72,000? - CORRECT ANSWER 76,596"

"A borrower defaulted on his mortgage loan payments, and the lender foreclosed. At the foreclosure sale, the property sold for $64,000; the unpaid loan balance at the time of foreclosure

was $78,000. What must the lender do in an attempt to recover the $14,000 that is still owed? -

CORRECT ANSWER Seek a deficiency judgment"

"A buyer is financing her new house with a fixed rate mortgage for $394,000 for 30 years at a 6% interest rate. Her monthly principal and interest payment will be $2,364. If the buyer takes all 30 years to pay off this loan, what will be the total interest paid over the life of her loan? (Use a 30-

day month/360-day year for calculations.) - CORRECT ANSWER $457,040"

"A borrower has been approved for a 6.5% fixed rate 30-year mortgage loan for $138,000. He will be closing on September 27. What will be the interim interest entry on the settlement statement?

CORRECT ANSWER 99.67"

"A property manager should make efforts to do all the following EXCEPT - CORRECT

ANSWER reinvest the profits by making capital improvements on the property."

"Which law does NOT specifically pertain to residential property management and related tasks?

- CORRECT ANSWER Real Estate Settlement Procedures Act" "Someone seeking to be excused from the dictates of a zoning ordinance because of hardship

should request a - CORRECT ANSWER variance A variance may also be sought to allow a

deviation from an ordinance due to unique circumstances. To get a variance, the property owner must prove that there is no other reasonable use for the property and the property owner will suffer a substantial hardship if the variance is not granted. The hardship also must not have been created by the property owner."

"Gabriel obtains his first license in August 2019. Which of the following statements is TRUE? -

CORRECT ANSWER He will have to pay renewal fees by June 30, 2020, if he wants his license

to remain current." "The assessed value of a parcel of land is $64,000 and the local ad valorem tax rate is $.72 per $100. Which of the following is the correct tax proration in accordance with customary practice if the

closing is April 28? - CORRECT ANSWER Seller will be debited $151.04, and buyer will be

credited $151.04."

"The legal practice of oral buyer agency in North Carolina requires - CORRECT ANSWER the

relationship be put in writing before presenting an offer."

"Which of the following statements is FALSE about the North Carolina Time Share Act? -

CORRECT ANSWER In North Carolina, any payments received by a time share developer or

broker must be deposited in a trust or escrow account in an insured bank or savings and loan in North Carolina and remain there for 3 days or upon cancellation by the purchaser, whichever occurs first."

"Which of the following statements is TRUE about subdivisions in North Carolina? - CORRECT

ANSWER Just because streets have been dedicated for public use and approved by the North

Carolina Department of Transportation, does not mean that the Department of Transportation has assumed responsibility for maintenance of the streets." "In North Carolina, a trustee is the conditional holder of title to mortgaged real estate. North

Carolina is considered what type of state? - CORRECT ANSWER Title theory

There are two different legal theories about the effect of mortgaging property—the title theory and the lien theory. Under the lien theory, which is the older, more traditional approach, a two- party mortgage instrument is used as security for the debt. The borrower (mortgagor) retains both legal and equitable title to the property. North Carolina follows the title theory."

"A real estate loan that uses both real estate and personal property as collateral is known as a -

CORRECT ANSWER package mortgage."

"Which of the following statements is FALSE about manufactured homes in North Carolina? -

CORRECT ANSWER A modular home has a vehicle identification number."

A buyer's agent owes a duty of to the seller. - CORRECT ANSWER Reasonable skill, care, and

honesty"

"An appraiser can calculate the annual gross rent multiplier by - CORRECT ANSWER

Dividing the price by the annual gross income" "A homeowner sells his home to a buyer and agrees to finance $15,000.00 of the purchase price on

an installment note. The $15,000.00 on the closing statement will be. entered as: - CORRECT

ANSWER Credit Buyer and Debit Seller"

"The vendor/owner retains naked legal title at the time of sale but gives possession to

vendee/buyer under a - CORRECT ANSWER Installment Land Contract"

"A lessor believes the desirability and sales volume of a large retail store will increase dramatically in the next few years. In negotiating a long-term lease for the premises, the lessor

would ask for which type of lease? - CORRECT ANSWER Percentage"

"As part of a purchase agreement, the seller agreed to complete a roof repair, prior to closing. The seller has now changed his or her mind and refuses to complete the repair. What rights does the

buyer have? - CORRECT ANSWER Rescission"

"A broker offers a listing agreement giving the broker's office sole permission to sell the property for a period of 120 days. The sellers want to reserve the right to sell the property themselves without paying a commission. In this situation, the listing agreement that will BEST protect both

parties' interests is a(n) - CORRECT ANSWER Exclusive Agency listing"

"An easement created by adverse use would be an easement by - CORRECT ANSWER

Prescription" "A seller revealed the property has no termites, but upon an inspection of the premises, the buyer learned there were termites. The buyer chose to go through with the contract and close. This is an

example of - CORRECT ANSWER Waiver"

"Persons or groups specifically exempted from discriminatory practices by the Civil Rights Act of

1968 include - CORRECT ANSWER Religious groups limiting leases on nonprofit housing to

the members of its religion" "An appraiser used 80% of the value arrived at by the market comparison approach, 20% of the value arrived at with the cost approach, and 0% of the value by the income approach. This

approach to value is known as - CORRECT ANSWER Reconciliation"

larger units was only $35,000. This is an example of the principle of - CORRECT ANSWER

Diminishing returns" "Associate Jones has Kathy under contract to purchase Lonnie's property. Jones will receive

commission from whom? - CORRECT ANSWER Jone's employing broker"

"Brownfields were created by three previous owners. They are responsible for - CORRECT

ANSWER The entire cleanup cost"

"Which of the following would be considered artificial monuments? - CORRECT ANSWER

Fences and sidewalks"

"Real property becomes personal property through - CORRECT ANSWER Severance"

"How much is Mr. Xi willing to pay for the property? The property produces an annual gross income of $52,000 and net operating costs are $6,000. The capitalization rate for comparable properties in the area is 8%. Interest on his loan will be 5%.

Cap Rate is 8%. - CORRECT ANSWER $575,

In order to determine the value of a single property, you must determine the NOI and then divide the NOI by the CAP Rate. $46,000/.08 = (Value) $575,000" "A third party that administers a trust on behalf of the beneficiary and carries out the wishes of

the trustor is the - CORRECT ANSWER Trustee"

"is an example of redlining. - CORRECT ANSWER A lender refusing to lend in a specific area"

"The primary function of FannieMae (FNMA) is to - CORRECT ANSWER Buy and sell

mortgages in the secondary mortgage market" "A homeowner sells his home to a buyer and agrees to finance $15,000.00 of the purchase price on

an installment note. The $15,000.00 on the closing statement will be. entered as: - CORRECT

ANSWER Credit Buyer and Debit Seller"

"A broker's authority under a listing contract includes - CORRECT ANSWER Only the

authority granted or implied"

"In order to qualify for a tax-deferred exchange, a seller must complete the acquisition of another

property within how many days of closing the first transaction? - CORRECT ANSWER 180

days" "If a husband and wife want a property they own together to automatically belong to the other

when one of them dies, the best way for them to take title is as - CORRECT ANSWER Joint

tenants"

"Which is an example of the Gross Rent Multiplier? - CORRECT ANSWER Annual Rental

Income of $80,000 and a sales price of $640,000 = 8 GRM"

"Proper recordation of documents affecting title and interest to real property legally provides -

CORRECT ANSWER Constructive notice"

"Which of the following statements regarding a valid option contract is CORRECT? - CORRECT

ANSWER If the option is not exercised, the optionor/owner retains the option consideration"

"The clause that changes the priority of a loan, making it secondary to a later recorded loan is

known as a(n) - CORRECT ANSWER Subordination clause"

"A mortgage insurance premium (MIP) is associated with what type of loan? - CORRECT

ANSWER FHA"

"At the moment the seller and the buyer enter into a sales contract, a buyer's interest in the real

property is known as - CORRECT ANSWER Equitable title"

"An enforceable contract for the sale of real estate must be - CORRECT ANSWER In writing"

"The arrangement between an owner of commercial property and a broker who agrees to procure

renters, collect rents, and collects security deposits is commonly known as - CORRECT

ANSWER A management agreement"

"Total rents declined $1,000 per month as a result of the city banning on-street parking in front and along side a small office building. Assuming a capitalization rate of 8%, the building suffered

a decline in value of - CORRECT ANSWER $150,000.

$1,000 x 12 = $12,000 (annual rent) divided by 8% = $150,000"

"Exemptions to the Foreign Investment in Real Property Tax Act (FIRPTA) withholding would be

- CORRECT ANSWER Personal residences under $300,000"

"Death of one of the principals will terminate which type of contract? - CORRECT ANSWER

Exclusive Right-to-Sell Listing Contract" "The intent of the parties, method of attachment, adaptation, and agreement are all legal tests for

determining whether an item is - CORRECT ANSWER Transferred by bill of sale or remains

with the property" "Starting at the northwest corner of Section 1, proceed in a southeasterly direction to the northeast corner of Section 12. From there, proceed west two miles to the southeast corner of Section 3. Proceed from there in a northeasterly direction to the point of beginning. What is the

total acreage of the parcel described? - CORRECT ANSWER 640 acres

The described parcel bisects Section 1 (320 acres) and Section 2. The 2 half sections (320 + 320) = one full section"

"A client came down with lead poisoning. Most likely, it did not come from - CORRECT

ANSWER Electromagnetic energy"

"What would be the best record of the entire history of title to a property? - CORRECT

ANSWER Abstract of title"

"After closing and taking possession of a home, the buyer found that the seller had removed the

chandelier. The buyer - CORRECT ANSWER Must turn to the inclusions section of the

Buy/Sell Contract to determine his or her rights" "A buyer closes on a new home purchased from the builder, and within 3 months of living there,

the roof fails. Who is liable? - CORRECT ANSWER The builder may be liable"

"A business organizational form in which general partner(s) are liable for all debts and actions is

called a - CORRECT ANSWER General partnership"

“A property owner is selling a rectangular lot that has 150' of road frontage and is 375' deep. If the

owner sells the lot for $50,000 per acre, what would be the sales price per front foot? - CORRECT

ANSWER 430.40"

"Under the concept of riparian rights, North Carolina owners of property adjacent to navigable

rivers or streams have the right to use the water and - CORRECT ANSWER are considered to

own the land to the edge of the water." "The Lead-Based Paint Hazard Reduction Act requires that in residential transactions subject to

the Act, a - CORRECT ANSWER prospective buyer be given the EPA lead hazard

informational pamphlet and a disclosure statement about the presence of lead in the property." "An appraiser is using the cost approach to value. After determining the replacement cost of the

building, she will - CORRECT ANSWER both estimate depreciation on the building and add

the land value that was determined by the sales comparison approach."

"A home is purchased under a land contract. Until the contract is paid in full, the buyer has -

CORRECT ANSWER equitable title to the property."

"A tenancy for years is a tenancy that - CORRECT ANSWER expires on a specific date"

"An offer to purchase real estate is a binding contract after it has been signed, communicated, and

accepted by whom? - CORRECT ANSWER buyer and seller"

"What is the Truth in Lending Act? - CORRECT ANSWER Made credit card companies and

loaning to provide all information to clients" "Which of the following statements is TRUE about the sale of property that has been the owner's

principal residence for the last 10 years? - CORRECT ANSWER The amount of the capital gain

is determined from contrasting the realized amount from the sale of the real property to that property's cost basis"

"To be valid in North Carolina, a deed must include - CORRECT ANSWER words of

conveyance. {A valid deed must contain certain essential elements, including the following: deed must be in writing; grantor must have the legal capacity to execute a deed; grantee named with reasonable certainty must be identified; there must be adequate words of conveyance; there must be an accurate legal description of the property conveyed; deed must be signed by the grantors; deed must be delivered to and voluntarily accepted by the grantee. Deeds do not have to be sealed in North Carolina to be valid.)" "In North Carolina, the last day that real estate taxes for the current year may be paid without

penalty is - CORRECT ANSWER by January 5 of the next year."

"A real estate loan indicates that if the title transfers to the property, the lender must be paid in

full immediately. This is known as - CORRECT ANSWER alienation."

"Which of the following loan terms will be considered a trigger term under the Truth in Lending

Act? - CORRECT ANSWER monthly payment amount, Number of payments, Annual interest

rate"

"A cloud on title to a property may be cured by - CORRECT ANSWER obtaining quitclaim

deeds from the party or parties with possible interests in the property." "A broker receives an earnest money deposit with a written offer that indicates that the buyer will leave the offer open for the seller's acceptance for 10 days. On the fifth day, and prior to acceptance by the seller, the buyer notifies the broker that he is withdrawing his offer and

demands the return of the deposit. In this situation, which statement is TRUE? - CORRECT

ANSWER The offeror has the right to withdraw the offer and have the deposit returned any

time before contract acceptance."

"The North Carolina Real Estate Commission has the power to - CORRECT ANSWER regulate

the brokerage activities of licensees." "A woman grants a life estate to her grandson and stipulates that on the grandson's death, the

title to the property will pass to her son-in-law. This second estate is known as an estate -

CORRECT ANSWER A)

in remainder interest." "A subject property is an 1,800-square-foot house with 3 bedrooms, 1½ baths, a 2-car garage and a deck that is listed for $163,500. A great comparable for the subject property sold for $166,200 and has 1,850 square feet, 3 bedrooms, 2 baths, a 1-car garage and a deck. The comparable property closed 2 months ago, and appreciation in the area has averaged 6% per year. Estimate a market value for the subject property, using the following market values: full bathroom = $2,000; 2-car

garage = $5,000; additional square footage = $55 per square foot. - CORRECT ANSWER

"Which of the following statements is TRUE about the North Carolina Real Estate Commission's

Working with Real Estate Agents brochure? - CORRECT ANSWER The licensee must provide

the brochure in all sales transactions, including commercial sales."

"A house cost $330,000 four years ago and just sold at a 5% profit. What was the sales price? -

CORRECT ANSWER $346,500"

"A typical promissory note for an FHA-insured loan may contain all the following - CORRECT

ANSWER a mortgage insurance requirement, an alienation clause, an acceleration clause."

"Provisional brokers - CORRECT ANSWER must successfully complete three postlicensing

courses."

"When brokers advertise on social media, they - CORRECT ANSWER must comply with

NCREC rules regarding advertising and marketing."

"Which type of listing provides the strongest protection of the broker's interests? - CORRECT

ANSWER Exclusive right to sell"

"Which contract does NOT have to be in writing to be enforceable in North Carolina? -

CORRECT ANSWER two year lease"

"A property is being appraised for loan purposes. The property is an elegant old mansion that has been converted into three apartments. Which approach to value is the appraiser most likely to

use? - CORRECT ANSWER Income capitalization approach"

"A purchaser buys a home for $143,900 and assumes the seller's loan balance of $109,700. How

much excise tax will be paid at closing? - CORRECT ANSWER $288.00"

"The North Carolina law that provides that a contract to sell land is not protected against a third

party unless recorded is called the - CORRECT ANSWER The Connor Act is a state law that

provides that many types of real estate documents are not valid as to third parties unless they are recorded. The documents covered include deeds, mortgages, installment land contracts, assignments, options, leases of more than three years, easements, and restrictive covenants." "The commission rate is 7¾% on a sale of $50,000. What is the dollar amount of the commission?

- CORRECT ANSWER $3,875" "A man sold his house for $105,000. He owned the house for five years and made a profit of 25%

on the sale over his previous purchase price. How much was originally paid for the house? -

CORRECT ANSWER $84,000"

"Which of the following situations present at signing would result in a void contract? -

CORRECT ANSWER The seller has been declared incompetent by a court."

"A seller wants to net $65,000 from the sale of her house after paying the broker's 6% fee based on

gross sales price. Her gross sales price needs to be - CORRECT ANSWER $69,149."

"A leasehold estate that automatically renews itself at each expiration is a - CORRECT

ANSWER periodic tenancy."

"Which of the following statements is FALSE about a property management contract? -

CORRECT ANSWER It is not necessary if the landlord resides in another country."

"Property management contracts are NOT required to contain - CORRECT ANSWER an

automatic renewal clause." "A woman purchased a condominium unit and obtained financing from a local savings

association. In this situation, which best identifies the buyer's role under a deed of trust? -

CORRECT ANSWER grantor"

"Which of the following statements is TRUE about the North Carolina Residential Property

Disclosure Act? - CORRECT ANSWER Buyers have a rescission period after contract

formation, if they do not receive the information required by the Act." "A broker enters into a listing agreement with a seller wherein the seller will receive $120, from the sale of a vacant lot and the broker will receive any sales proceeds exceeding that amount

as commission. This type of agreement is called - CORRECT ANSWER a net listing. If the

listing calls for a net fee, the agreement is referred to as called a net listing. A net listing provision refers to the amount of money the seller will receive if the property is sold. The seller's property is listed for this net amount, and the broker is free to offer the property for sale at any price higher than the listing price. Although not illegal in North Carolina, this type of listing is not recommended because of an obvious conflict of interest." "If a person is being compensated, which of the following activities does NOT require an active

North Carolina real estate license? - CORRECT ANSWER Negotiating the sale of personally

owned real estate" "The buyers enter into a purchase contract with the sellers to buy the sellers' house for $84,500. The buyers deposit $2,000 as earnest money and obtain a new mortgage loan for $67,600. The purchase contract provides for a March 15 settlement. The buyers and sellers prorate the year's estimated real estate taxes (using the 360-day method) of $880.96. The taxes are unpaid and will be paid later in the year by the buyers. The buyers have additional closing costs of $1,250, and the sellers have other closing costs of $850. How much cash must the buyers bring to the settlement?

CORRECT ANSWER $15,

explanation-$84,500 purchase price less $67,600 loan, less $2,000 deposit, less $183.53 prorated taxes, plus $1,250 closing costs = $15,966.47 rounded to $15,966; proration of taxes: $880.96 ÷ 360 days = $2.447 per day × 75 days (Jan 1-Mar 15) = $183.25 credit buyer/debit seller"

"A promissory note given with a mortgage would be the - CORRECT ANSWER Primary

promise to repay the debt" "When a property goes into foreclosure and then the owner executes a lease, _______ when the

property changes ownership. - CORRECT ANSWER The lease terminates"

"A woman resided in her personal residence for 7 years. She married last month and deeded a one-half (1/2) interest in her home to her husband. She moved to his house and listed her home

for sale. Upon sale, the maximum exclusion of capital gains tax is - CORRECT ANSWER

"Oral or verbal evidence may not be used to change a contract that has been put in writing due to

___________ - CORRECT ANSWER The parol evidence rule"

"A husband and wife buy a home but fail to specify what form of legal ownership they preferred.

What form of ownership are they presumed to have taken? - CORRECT ANSWER Tenancy in

common"

"A wife's right to a legal life estate in her husband's home upon his death is known as -

CORRECT ANSWER Dower"

"A purchaser is paying $350,000 for a property with a loan of $150,000. What is the down

payment percentage? - CORRECT ANSWER 57.14%

If you know the total and the part and want to find the percentage, divide the part by the total. The downpayment is $350,000 - $150,000 (loan amount), which is $200,000. $200,000 divided by $350,000 is 57.14%."

"A home warranty does NOT cover - CORRECT ANSWER Developer encumbrances"

"A method used to control density and overcrowding by restricting setbacks, building height, or

the ratio of open area is known as - CORRECT ANSWER Bulk"

"Real property transfers when a sole person dies leaving no will by - CORRECT ANSWER

Descent" "A broker offers buyers one-stop shopping by providing title insurance, home inspection,

mortgage origination, and other like services. This is an example of - CORRECT ANSWER A

controlled business arrangement" "'M's purchase offer affords the seller three days to accept. One day after making the offer, and before acceptance, 'M' wants to withdraw the offer. 'M's buyer agent should inform 'M' that the

CORRECT ANSWER Offer may be withdrawn without penalty"

"A residential lease provided that the landlord would supply water. The water to the building was cut off because the landlord had not paid the water bill. The tenant can leave the premises with no

further lease obligations based on - CORRECT ANSWER Constructive eviction"

42' X 36' = 1,512 square feet X $108.00 = $163,296.00; then 1,512 sq. ft. X $4.00 = $6,048.00, which is subtracted from $163,296. = $157,248; plus land = $185,148.00"

"The legislation demanding that loan origination fees be disclosed to borrowers is known as -

CORRECT ANSWER Real Estate Settlement Procedures Act and the Truth in Lending Act"

"Broker A is preparing a closing statement on a house that sold for $150,000. Broker A holds the buyer's $5,000 earnest money deposit. The Buyer will put a $30,000 down payment. The remaining purchase price will be financed by a new mortgage on which the buyer will pay a 2 point loan origination fee. The buyer will pay $1,600.00 in miscellaneous closing expenses. Current year real estate taxes are $1,500, to which Buyer will receive a credit from seller for the

remaining 6 months. On a June 30 closing, how much cash will the buyer owe at closing? -

CORRECT ANSWER $28,250.

Buyer Debits = $150k purchase price, $1,600 misc closing costs and $2,400 loan origination totaling $154,000. Buyer Credits = $5,000 earnest, Loan of $120,000 and $750 proration of this years taxes not yet due (but payable at the end of the year) for a total of $125,750. $154,000 minus $125,750 equals $28,250 Buyer must bring to closing."