FL RE SALESPERSON: FINANCE, APPRAISAL & MATH

Cheat Sheet

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MORTGAGE BASICS

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LOAN TYPES QUICK REFERENCE

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Key point: FHA insures loans (doesn't make them); VA guarantees loans.

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QUALIFYING RATIOS (28/36 Rule — Conventional)

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Remember: FHA allows 31% front / 43% back (or higher w/ compensating factors)

Example: Income $6,000 → Max PITI = $1,680 (28%); Max total debt payment = $2,160 (36%)

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POINTS & FEES

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Math: $300,000 loan × 2 points = $6,000

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RESPA & TRID KEY RULES

RESPA Prohibits

• ✗ Kickbacks between settlement providers (no referral fees to RE agents)

• ✗ Excessive escrow cushion (max 2 months reserves)

• ✗ Undisclosed affiliate referrals

TRID Timeline (CRITICAL)

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Exam trap: If CD changes materially, 3-day clock restarts.

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TITLE INSURANCE

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Coverage includes: Unknown liens, forgery, recording errors, unknown heirs Excludes: Survey issues (without endorsement), zoning violations, environmental

FL rule: Title insurance cost varies by county. South FL (Miami-Dade, Broward, Palm Beach) = buyer pays. North FL = seller pays (regional custom).

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PRORATION CALCULATIONS

Two Methods

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Example (365-Day) — Property Tax

Annual tax: $3,650 | Closing: April 30 (day 120) | Seller owns Jan 1–April 30

• Daily rate = $3,650 ÷ 365 = $10/day

• Seller owes = 120 days × $10 = $1,200

Example — Rent Proration

Monthly rent: $1,500 | Closing: June 10 | Seller collected full June rent

• Buyer owns June 10–30 = 21 days

• Daily rate = $1,500 ÷ 30 = $50/day

• Buyer credit = 21 × $50 = $1,050

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SETTLEMENT COSTS — WHO PAYS (Florida)

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APPRAISAL vs. CMA vs. BPO

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⚠️ Licensees cannot call work "appraisal" unless they're licensed appraisers

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KEY VALUE DEFINITIONS

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Concept	Florida Rule
Theory	Lien theory — borrower holds title; lender holds lien
Foreclosure	Judicial — must go through courts
Documents	Promissory note (debt) + Mortgage (security)
Feature	Conventional	FHA	VA	USDA
Min. Down	3–20%	3.5%	0%	0%
Insurance	PMI (>20% LTV)	MIP always	Funding fee	Guarantee fee
Credit	Strict	Flexible	Flexible	Flexible
Who qualifies	Anyone	Anyone	Veterans/active duty	Income-qualified rural
PMI trigger	LTV > 80%	Always required	N/A	N/A
Ratio	Formula	Max %
Front-end (housing)	PITI ÷ Gross Monthly Income	28%
Back-end (total debt)	(PITI + all monthly debts) ÷ Gross Monthly Income	36%
Term	Definition
1 Point	1% of loan amount
Discount Points	Paid upfront to lower interest rate (~0.25% per point)
Origination Points	Lender's processing fee
Document	Deadline
Loan Estimate	Within 3 business days of application
Closing Disclosure	At least 3 business days BEFORE closing
Type	Protects	Notes
Owner's Policy	Buyer against title defects	Optional but recommended
Lender's Policy	Lender's interest (required by lender)	Buyer pays
Method	Year Length	Month Length	Use
365-day (actual)	365 days	Actual days	Most accurate; common on exam
30-day (banker's)	360 days	30 days	Simpler calculation
Cost	Payer
Lender's title insurance	Buyer
Owner's title insurance	Varies by county
Doc stamps on deed	Seller
Doc stamps on note	Buyer
Intangible tax on mortgage	Buyer
Survey, appraisal, inspection	Buyer
Real estate commission	Seller
Tool	Who Prepares	Purpose	Valid for Lending
Appraisal	Licensed/certified appraiser	Market value (USPAP standard)	YES
CMA	Real estate licensee	Help price property	No
BPO	Broker/licensee	REO/short sale opinions	Limited
Term	Definition
Market Value	Most probable price in competitive market, reasonable time, informed parties, no pressure
Assessed Value	County tax assessor's value (often ≠ market value)
Appraised Value	Appraiser's opinion of market value at specific date
Loan-to-Value (LTV)	Loan amount ÷ Property value