Real Estate - Ch 3 - Closings

The purpose of the closing event is to

exchange legal title for the sale price.

A buyer's financing arrangements are often concluded at closing, because

the lender wants to ensure proper handling of the
collateral for the loan.

According to the Real Estate Settlement and Procedures Act, a uniform settlement statement must be used whenever

the loan is to be sold to FNMA.

A sale contract stipulates that a buyer is to pay the
seller's title insurance expenses. This practice is not
customary in the area. In this case,

the buyer must pay the expense.

A prorated expense on the settlement statement is

a debit to one party and a credit to the other.

The amount a buyer owes at closing is equal to

the excess of the buyer's debits over the buyer's credits.

Which of the following are examples of closing items
not prorated between buyer and seller?

Title insurance and inspection fees

Which of the following items are paid in arrears?

Taxes and interest

Which of the following items are paid in advance?

Rents and insurance

If a sale contract indicates that the day of closing is
"the seller's day," this means that

the seller must pay prorated expenses inclusive of
the day of closing.

Documentary stamps are used to

document the payment of a transfer tax.

What is the Internal Revenue Service's Form 1099-S?

A form that summarizes and reports transaction
data from a closing

Assume a seller at closing must pay transfer taxes at the rate of $1.00 for every $500 of purchase price, or fraction thereof. If the sale price is $345,600, how
much tax must the seller pay?

$692

If a seller paid $488 for transfer taxes at closing, and
the rate was $1.00 for every $400 or fraction thereof
of the sale price, what was the sale price?

$195,200