Student Question: Qualifying the Buyer

Answer to student question (below):

Let me know if you had any technical difficulties viewing this video. One student has so far but I checked it and it seems to be ok.

The answer to Qualifying the Buyer Problem 1 is on the bottom of the course homepage and pasted below. PI stands for Principle and Interest which is call the 'Debt Service' or mortgage payment. This is calculated using your calculator based on the terms of the mortgage. The MHE starts with PI and adds items like monthly property taxes, insurance, homeowners association dues, and mortgage insurance, if applicable.

Qualifying the Buyer Problem 1:

PI=$614.30 (n=260, i%=.10/12, PV=70,000, FV=0, solve for PMT)

MHE = $614.230+ $84+$21+$24=$743.30

TMD=$743.30+$380+$65=$1,188.30

SMI=$3,200+$240=$3,440

MDR= MHE/SMI = $743.30/$3,440=.2161 --> Make the loan

TDR=TMD/SMI=$1,188.30/$3,440=.3454 ---> Make the loan



Student Question:
On problem 1, in the video for Mortgage Underwriting, i am having extreme difficulty in trying to figure out how you came up with the MHE of $743.22. I'm not sure if i'm completely missing something, but i cant find any information in the text and i have tried several ways of adding up the numbers to try and get even close to that number. Also, what is meant when you say "debt service of $614.23?" Please explain how to calculate MHE. Thanks!

Student Question on Underwriting Video Clip

Answer to student question:

I am watching the clip right now and it appears to be ok. However, it did look like there was a problem with the very first slide. Let it run for a couple minutes and you should see the second slide.

If you have further difficulty, please let me know. This material is fair game on the first exam and final exam.

Cheers,
jah

J. Andrew Hansz, Ph.D., CFA
Associate Professor
Department of Finance and Real Estate
University of Texas, Arlington
Box 19449
Arlington, TX 76019
e-mail: ahansz@gmail.com
website: www.uta.edu/faculty/hansz

House for sale near UTA campus. See http://sites.google.com/site/1205Briarwood


STUDENT QUESTION:

Dr. Hansz,

I was viewing the video clip for Chapter 13 yesterday. I wanted to let you know that on the last video for the chapter 13, Buyer Qualifications, the slides were not all working. I saw the first couple of slides, but as you clicked through them, the page became blank. The two problems on qualifying the buyer that you presented, I was not able to view. Will there be problems on the test like the ones you presented? I checked the powerpoint slides and did not see the problems on the slides. I do not think that there is a problem with my computer, as I have been able to see all the other slides on the video as you present them, but I could be wrong. Just wondering if you have heard from other students about not being able to see the slides.

Thank you,

Student Question: WebCT

Answer to Student Question:

The class will be added after the Census date. No grades yet so we will not need WebCT for the time being. jah

J. Andrew Hansz, Ph.D., CFA
Associate Professor
Department of Finance and Real Estate
University of Texas, Arlington
Box 19449
Arlington, TX 76019
e-mail: ahansz@gmail.com
website: www.uta.edu/faculty/hansz

House for sale near UTA campus. See http://sites.google.com/site/1205Briarwood

Student Question:
I understand WebCT will only be used for posting/checking grades, but I am not able to see the class through WebCT. It is not there. I called the helpdesk and they told me to check with you to see if you've uploaded the class to WebCT for student view. Please advise. Thanks in advance.

Student Question

Dr. Hansz,

Will there be any TVM on the test on Saturday?


Brad Motley

RESPONSE
Looking at our chapters for exam 2, I don't see a lot of TVM applications but there are certainly calculation problems (see the prior post).

Student Question - General

What calculations will we need to be able to do?

REPLY

You are responsible for all the material in the assigned chapters. Now, I can safely say that there will not be as many calculation problems as the first exam but you definitely need to bring your calculator. There will be calculation problems on exam 2. Think about some of the topics we covered recently, property taxes, zoning requirements, leases, closing costs,...

Student Question - Property Tax Calculation

Hi Dr. Hansz,

Can you please explain how the answer to chapter 4, number three in the short answer question is $415,600? How do you get to this answer? Thank you in advance for your help.

Regards,

LaTanya Morgan-Diaz


RESPONSE:

Hi LaTanya,

I think you were referring to question number 2 from the Chapter 4 short answer questions. The question is,

2. What is the implied market value of a property that qualifies for a $25,000 homestead exemption in jurisdiction that levies a 24.5 mill tax rate if the annual property tax bill for the property is $9,569.70? Note: I think we can assume, because it was not specified in the question, that assessed value is 100% of the market value estimate (like it is in Texas).

Let me give you another example and see if you can figure out the answer to question 2 base on the example below (hint just work backwards):

A property has an ad valorem value of $475,0000 in a state that requires a 50% assessment ratio (Texas's assessment ratio is 100% but let's use 50% to make it interesting). The property owner qualifies for two exemptions. First, the owner qualifies for a homestead exemption of $25,000. Second, the owner also qualifies for an additional $12,000 exemption because she is over the age of 60. The property tax rates for the jurisdiction are as follows:

County tax 4 mills

School district 11 mills

Hospital 2 mills

Fire department 1 mill

Total tax rate 18 mills or .018 (18/1000)

STEP 1: Calculate the assessed value.

Ad valorem value x assessment ratio = assessed value

$475,000 x .50 = $237,500

STEP 2: Calculate the taxable value.

Assessed value - exemptions = taxable value

$237,500 - ($25,000 + $12,000) = $200,500

STEP 3: Calculate the property tax due.

Taxable value x millage rate = property tax due

$200,500 x .018 = $3,609.00