Finance
When NJ property taxes are prorated at closing, the calculation is based on:
AThe number of rooms in the property
BThe number of days each party owns the property during the tax period✓ Correct
CThe assessed value only
DThe buyer's mortgage amount
Explanation
Property tax prorations are calculated on a daily or monthly basis: the annual tax is divided to determine the per-day amount, then multiplied by the number of days each party owns the property in the billing period.
People Also Study
Related New Jersey Questions
- A NJ buyer is told that property taxes of $1,100 per month are included in their PITI payment. If the annual tax bill is $12,600, what is the monthly escrow shortfall or surplus?Real Estate Math
- A NJ property has annual taxes of $9,600. Taxes are paid in arrears. The closing is May 31. What is the seller's tax proration (using a 360-day year, seller responsible through closing)?Real Estate Math
- New Jersey has a realty transfer fee (RTF) paid at closing. Who is primarily responsible for paying this fee?Finance
- A seller agrees to pay 3% of the purchase price toward the buyer's closing costs. On a $400,000 sale, this concession equals:Finance
- Which federal law governs real estate settlement procedures and requires the Loan Estimate and Closing Disclosure?Finance
- The loan-to-value (LTV) ratio is calculated as:Finance
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.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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
Study This Topic
Practice More New Jersey Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free New Jersey Quiz →