A property in Albany has annual property taxes of $6,240. The closing is scheduled for August 1st. If the seller has not yet paid the current year's taxes and is responsible for taxes through the day before closing, how much should be credited to the buyer at closing using New York's statutory 360-day (banker's year) proration method?
Correct Answer
A) $3,640.00
Daily rate = $6,240 ÷ 360 = $17.3333. Using the 30-day-month banker's year, the seller owes Jan 1 through Jul 31, which is 7 × 30 = 210 days. Credit to buyer = 210 × $17.3333 = $3,640.00.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
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