Escrow & Title
At closing in NC, prorations for property taxes are typically based on:
AThe previous year's tax bill divided by 365 days✓ Correct
BThe current assessment times the anticipated rate
CA flat fee set by the closing attorney
DThe county's average tax rate
Explanation
NC property tax prorations at closing are typically calculated using the prior year's tax bill divided by 365 days to determine the daily rate, then multiplied by the number of days each party owns the property.
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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.
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.
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.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Math Concepts
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