Settlement Statement	Buyer		Seller
Item	Debits	Credits	Debits	Credits
Purchase Price	435,000.00			435,000.00
Deposit		10,000.00	10,000.00
Buyer's New Bank Loan
Origination Fee
Discount Points		4,000.00	4,000.00
Appraisal
Credit Report
Document Prep Fee
Prepaid Interest on new loan
Reserve account for new loan	742.20			742.20
Homeowner's Ins. Premium (First year)
Seller Financing		43,500.00	43,500.00
Payoff of Seller's first loan
Prorated interest for seller's first loan		674.94	674.94
Reserve account for seller's first loan
Payoff of seller's home equity loan
Prorated interest for seller's equity loan
Property Taxes		535.09	535.09
Sales commission: listing broker
Sales commission: selling broker
Documentary transfer tax
Owner's title insurance
Lender's title insurance
Pest Inspection
Escrow Fee
Recording Fee
Balance due from buyer
Balance due to seller
Totals	445,155.31	445,155.31	435,251.50	435,251.50

Settlement Statement Problem

Complete the simplified settlement statement form (Excel spreadsheet provided) for the transaction described below.

The various closing costs will be allocated between the parties in the customary way unless otherwise noted.

Use a 360-day year and 30-day months for your prorations.

Round dollar amounts to two decimal places for each step in your calculations.

(Digits from 1 through 4 should be rounded down; digits from 5 through 9 should be rounded up.)

The house at 314 Baker Street sells on January 28 for $435,000. The offer that the seller accepts is accompanied by a $10,000 good faith deposit. The purchase agreement calls for the buyer to make a 10% down payment and obtain an 80%, 30-year conventional loan with an annual interest rate not to exceed 6%. The seller agrees to accept a five-year straight note secured by a deed of trust for the balance of the purchase price; the interest rate on this seller second will be 8%. The seller will also pay up to $4,000 toward any discount points charged by the buyers lender. The closing is to take place on March 14.

The buyer obtains the necessary loan commitment from Clearwater Bank. The appraised value of the property is $436,500. The terms of the commitment include an 80% loan for 30 years at 6% annual interest, a 1% origination fee, and two discount points. (Remember that the seller has agreed to pay for a portion of the discount points.) The appraisal fee is $400, the credit report costs $45, and the bank is charging a $200 document preparation fee. Prepaid interest on the buyers loan will also have to be paid at closing, to cover interest accruing from the closing date through the end of the month.

At closing, Clearwater Bank will require a reserve account deposit of $742.20, which is enough to cover three months worth of property taxes and homeowners insurance. The first payment on the Clearwater loan will be due on May 1. The buyer is purchasing a three-year homeowners insurance policy for $990, with the first years premium ($330) to be prepaid at closing; that will be handled through escrow. This years property taxes are $2,640 and the seller has not yet paid them. The buyer will be responsible for property taxes on the day of closing.

Liens against the property that the seller will pay off at closing include a first deed of trust that will have a balance of $300,423.62 after the March 1 payment is made, and a home equity loan that will have a balance of $12,553.27 after the March 1 payment is made. The first lienholder instructs the escrow officer to collect prorated interest, if any, equal to $48.21 per day. The home equity lender advises the escrow officer that $3.14 in interest per day will be due on the home improvement loan. Interest on both loans will be charged up to and including the day of closing. The balance in the sellers reserve account for the first loan, $251.50, will be refunded at closing.

The 6% brokerage commission is to be shared 50/50 between the listing broker and the selling broker, and the transfer tax is 55 cents per $500 of value. The premium for the owners title insurance policy (which the seller is paying) is $1,080; the premium for the lenders title policy (which the buyer is paying) is $365. The pest inspection fee is $230, and the buyer has agreed to pay that; and the escrow fee, to be divided evenly between the parties, is $600. The buyers recording costs will be $35; the sellers recording costs will be $19.