Real Estate Math
A Virginia property tax bill is $4,200 annually. Closing occurs on April 1. Using 365-day proration, how much does the seller owe the buyer as a property tax credit?
A$700
B$1,050
C$1,036✓ Correct
D$3,500
Explanation
Seller owes taxes for Jan 1–Mar 31 = 90 days. Daily rate = $4,200 ÷ 365 = $11.
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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.
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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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.
Math Concepts
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