Escrow & Title
Prorations at a NJ closing are used to:
ADivide the broker's commission between cooperating agents
BFairly allocate ongoing expenses (taxes, rent, HOA fees) between buyer and seller based on the closing date✓ Correct
CCalculate transfer taxes
DDetermine the lender's origination fee
Explanation
Prorations ensure that expenses paid in advance or arrears (property taxes, prepaid rents, HOA dues) are fairly divided between buyer and seller as of the closing date.
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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.
Transfer TaxA tax imposed by state or local governments when real property ownership is transferred, typically based on the sale price.
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
State-Specific Concepts
Transfer Tax
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