Real Estate Calculations

Divide the percentage by 100 and move the decimal point left two places

100/2.5%=.025

Multiply by 100 and add a percent sign or move the decimal point right two places

.045=4.5%

Divide the top number by the bottom number

The percentage of a property’s value the bank loaned/will loan on. It’s the ratio of the loan amount to the property’s value, where value is the lesser of either appraised value or sales price

The percentage of a property’s value the bank loaned/will loan on. It’s the ratio of the loan amount to the property’s value, where value is the lesser of either appraised value or sales price

Loan Amount/Value x 100

Prepaid interest paid by or on behalf of borrowers at the beginning of the loan to reduce monthly mortgage payments

1% of the loan amount per point

To lower an interest rate, borrowers can purchase discount points. Each discount point costs 1% of the loan amount and means 0.25% off the mortgage rate

Amount paid for points=loan amount x number of points (followed by a % sign)

The amount of value or interest a homeowner has in a property less debts against the property such as a mortgage loan

Equity=Value-Amount Owed

The largest funding source for local services such as schools, roads, police, and fire protection

Value x Assessment Ratio=Assessed Value

Assessed value x tax rate=annual property tax. Divide by 12 months in a year to get the monthly property tax amount

Divide $3 by $100 to calculate the tax rate. So $3/100=.03

When mills are used, it’s a rate per $1,000 . So 30 mills is the same as $30/$1,000

A property worth $350,000 is assessed at 40%. The tax rate is $30 per $1,000 or 30 mills. Annual taxes=$350,000 x 40%=$140,000 x .03=$4,200

Calculating what pro-rata amount is owed by (or to) each party at closing for expenses or income generated by the real estate sale. Prorated items are either accrued or prepaid

Amounts allocated to both buyer and seller that haven’t yet been paid but will be paid by the buyer after closing. These items are credited to the buyer and debited to the seller

Amounts allocated to both buyer and seller that were paid by the seller before closing. These items are credited to the seller and debited to the buyer

365 days

365 days

366 days

360 Days

Per Diem Rate=Amount To Be Prorated/either 360 or 365

Total Commission=Sales Price x Commission Rate

Property sells for $350,000 with a 5% commission. Commission=$350,000 x .05 (or 5%) =$17,500

Broker earns a 5% commission of $17,500. Sale price=$17,500 /5%=$350,000

Broker earns $17,500 for selling a $350,000 property. Commission rate=$17,500/$350,000=.05 or 5%

Calculates the amount the seller receives after paying commission and other expenses

100% of sale price-commission %

Sales price x percent to seller

Example: Sale price is $150,000 with a 7% commission rate. Percent to seller is 93% or .93. Net to the seller =$150,000 x .93=$139,500

Sellers loan balance is $60,000 with a 5% interest rate. The sale closes on June 15, with the last payment made on June 1. Seller interest owed=$60,000x5%\360=$8.33x15=$124.95

The earnest money deposit given in good faith with the contract is not the down payment, it is applied to the property purchase price

Amount of Annual Interest

Per Diem Interest

Monthly payment x total number of payments

Monthly payment x total payments-original loan value

12 (months per year) x number of years of the loan

Down payment and closing costs, minus earnest money and other credits

Applied when real property is sold.

Applied when real property is sold. Payment may be negotiable between the parties. It is typically paid on the sale price

A tax on the recordation of the mortgage/deed of trust and is based on the loan amount

Loans that are paid off over time

Sufficient to pay off the loan by the end of the loan term

Principal, Interest, Taxes, and Insurance