PSI Exam: Real Estate Calculations
(2022/2023)
Loan to Value Ratio ✔✔its the ratio of the loan amount to the property value, where value is the
lesser of either appraised value or sales price
LTVR= ✔✔(loan amount/val
...
PSI Exam: Real Estate Calculations
(2022/2023)
Loan to Value Ratio ✔✔its the ratio of the loan amount to the property value, where value is the
lesser of either appraised value or sales price
LTVR= ✔✔(loan amount/value) x 100
each discount point costs ✔✔1% of the loan amount, and means a discount of 0.25% off the
mortgage rate
amount paid for points= ✔✔loan amount x number of points %
equity ✔✔is the amount of value or interest a homeowner has in a property less debts against the
property
equity= ✔✔value - amount owed
appreciation in value ✔✔increase equity
depreciation in value ✔✔reduces equity
assessed value= ✔✔value x assessment ratio
annual property taxes = ✔✔assessed value x tax rate
proration ✔✔is calculation what "pro-rata" amount is owed by (or to) each party at closing for
expenses or income generated by the real estate sale
accrued prorated items ✔✔amounts allocated to both buyer & seller that havent yet been paid
but will be paid by the buyers after closing (items are credited to the buyer & debited to the
seller)
prepaid prorated items ✔✔amounts allocated to both buyer & seller that were paid by the seller
before closing (items are credited to the seller and debited to the buyer)
calculate prorations with the seller ✔✔responsible for expenses & income on closing day
net to seller = ✔✔sales price x percent to seller
percent to seller = ✔✔100% of sale price -commission %
at closing buyers owe ✔✔closing costs, lender fees, a portion of the upcoming years property
taxes & insurance, recording fees, etc.
amount of annual interest = ✔✔loan balance x interest rate
total amount paid on a loan= ✔✔monthly payment x total number of payments
transfer tax ✔✔is applied when real property is sold
mortgage/deed of trust recording tax ✔✔is a tax on the recordation of the mortgage/deed of trust
& is based on the loan amount
amortized loan ✔✔are those that are paid off over time
mortgage payments include ✔✔PITI (principal, interest, taxes, insurance)
interest rate= ✔✔annual interest / loan balance
loan balance ✔✔annual interest / interest rate
total loan interest amount= ✔✔monthly payment x total number payments- original loan value
square feet per acre ✔✔43,560
feet in a mile ✔✔5,280
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