A home is being purchased for $272, 000 with a settlement date of march 21, and

Question

A home is being purchased for $272, 000 with a settlement date of march 21, and an earnest money $2, 500, and a due diligence fee of $150. The buyer will obtain a 93% new conventional 15-year mortgage loan with a fixed internet rate of 5.5%, 1% loan origination fee, and 1.5 loan discount point. The buyer paid for an appraisal $345 and credit report $50 at loan application. Other costs to be paid at settlement include interim interest, homeowner insurance annual premium $742, private mortgage insurance premium $960, loan escrow account deposit 8 months real property taxes, 2 months homeowner insurance, 2 months private mortgage insurance premium. Real property taxes for the current year $2, 847 and will be paid later in the year buy the buyer. Other settlement costs include attorney fee $525, title insurance premium $385, deed recording $35, mortgage recording $45, survey $425. pest inspection $65. courier fee for buyer's lender $38. Calculate the total amount the buyer must bring to settlement using the 30/360 method for proration A home is being sold for $272, 000 with a settlement date of March 21, and an earnest money $2, 500, and a due diligence fee of $150. The seller loan payoff is $212, 780, and a broker commission 6.5% of sales price. Other costs to be paid at settlement include real property taxes for the current year $2, 847. Other settlement costs include deed preparation $120, excise tax and a courier fee the seller's lender $38. Calculate the seller proceeds at settlement using the 30/360 method for proration.

Explanation / Answer

In this problem a person is buying property of $272,200 by taking 5.5% mortgage loan. Settlement date is March21. Following special types of charges payable on settlement.

1. Earnest money: It is a type of security deposit. It shows how much serious the party is for undertaking the transaction property. It is kept deposited and repaid after it is over. The money is $2,500.

2. Interim interrest: It is like prepaid interest. From the date pf settlement to the end of month, interest due is paid as advance. Here 21st March is settlement date. So include 21st March for its computation. End of the month is 31st March. So altogether there is 11 days. Calculation is shown in the table below.

3. Loan discount point: It is paid at the time of taking loan. It gives lender the right to get loan at lower interest rate. It is 1.5%. So 1.5% of loan amount will be paid on settlement.

Based on above ideas, following calculation has been made

Answer: He has to pay $309,569 on settlement. From this amount, he will collect $252,960 from loan. Balance $56,609 he has to arrange from private sources.

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Problem 2: Now the property is sold. Here earnest money is 2500. It is deposited by buyer to show the interest in buying the property. So seller will receive it. However it will be returned in due course. Diligence fees is assumed as paid by seller. Property tax is assumed as paid for the entire year by seller. Based on these assumptions, calculations are made.

Statement showing money required to settle the Loan Details Amount Amount 1. Cost of hone 272,000 2. Earnest money deposited 2,500 3. Diligence fess 150 4. Origination fees of loan     [1% of $252,960] 2,529.60 5. Loan discount point    [1.5% of 252,960] 3794.4 6. appraisal fees 345 7. Credit Report 50 8. Interim interest      [From 21march to 31st march i.e. 13 days]      [252960*5.5%*[13/360]] 502.407 9. Escrow accounts deposits:      8 months real property tax @$2,847] 22776     Homeowners Insurance @ 742 for 2 months 1484     Private Mortgage Insurance premium     @$960 for 2 months 1920 26180 10Attorny fess 525 11 Title Insurance premium 385 12 Deed Recording 35 13 Mortgage recording 45 14 Survey 425 15 Pest Inspection 65 16 Courier fees 38 Total 309,569 Less: received from loan           [93% of $272000] 252960 Cash required for settlement 56,609

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