Escrow & Title
Prorations at an Arizona real estate closing are calculations that:
ADetermine the final loan amount after adjustments
BAllocate recurring costs (like property taxes and HOA fees) between buyer and seller based on the closing date✓ Correct
CCalculate the agent's commission split
DDetermine the amount of earnest money to be released
Explanation
Prorations fairly divide ongoing expenses — such as property taxes, HOA dues, and prepaid rents — between buyer and seller based on the number of days each party owned or will own the property in the billing period.
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Key Terms to Know
Proration
The division of ongoing property expenses (taxes, HOA dues, rents) between buyer and seller at closing based on their respective days of ownership.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
Closing CostsFees and expenses paid by the buyer and/or seller at the closing of a real estate transaction, in addition to the property's purchase price.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Math Concepts
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