A Florida investor purchases a property for $280,000 using a wraparound mortgage. The existing mortgage balance is $180,000 and the new wraparound mortgage is $250,000. What documentary stamp tax is due on the wraparound mortgage?
Correct Answer
D) $245.00
Correct: D - $245.00. Tax is due only on the amount exceeding existing mortgage: ($250,000 - $180,000) ÷ $100 × $0.35 = $245.00. Why not A: This option is incorrect because "$875.00" does not match the rule tested by the question. The correct answer is "$245.00". Tax is due only on the amount exceeding existing mortgage: ($250,000 - $180,000) ÷ $100 × $0.35 = $245.00. Why not B: This option is incorrect because "$630.00" does not match the rule tested by the question. The correct answer is "$245.00". Tax is due only on the amount exceeding existing mortgage: ($250,000 - $180,000) ÷ $100 × $0.35 = $245.00. Why not C: This option is incorrect because "$980.00" does not match the rule tested by the question. The correct answer is "$245.00". Tax is due only on the amount exceeding existing mortgage: ($250,000 - $180,000) ÷ $100 × $0.35 = $245.00.
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Related Topics & Key Terms
Key Terms:
Related Concepts
RESPA is a federal law that requires lenders to provide borrowers with information about settlement costs, prohibits kickbacks and referral fees, and limits escrow account deposits. It applies to federally related mortgage loans.
The secondary mortgage market is where existing mortgage loans are bought and sold between lenders, investors, and government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae.
TILA is a federal law that requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR), total finance charges, and loan terms. It is implemented by Regulation Z.
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