Financing, Settlement, and Real Estate Mathematics
Vocabulary and disclosure timing
Financing items combine vocabulary with arithmetic. Know loan-to-value, down payment, points (one point = 1% of the loan amount), private mortgage insurance, escrow or impound accounts, and the difference between the note rate and the APR. Federal timing rules appear often: the Loan Estimate within three business days of application, and the Closing Disclosure at least three business days before consummation. RESPA bars fees for referrals of settlement business and constrains affiliated business arrangements. District programs - DCHFA first mortgages, DC Open Doors, and the Home Purchase Assistance Program's deferred subordinate loans - show up in item stems.
District taxes
District taxes are the highest-yield math. Deed recordation tax and transfer tax are separate impositions, each calculated at 1.1% of consideration below $400,000 and 1.45% at $400,000 or more, and a deed of trust is separately subject to recordation tax (roughly 1.1% of the debt secured). A reduced first-time homebuyer recordation rate applies to eligible purchases under $400,000, subject to income limits - confirm current figures before relying on them.
Worked example: $500,000 purchase, $400,000 loan. Buyer's recordation tax on the deed: 1.45% × $500,000 = $7,250. Seller's transfer tax: $7,250. Buyer's recordation tax on the deed of trust: 1.1% × $400,000 = $4,400. Government taxes total $18,900, before title and settlement fees.
Prorations: divide the annual figure by 365 and multiply by the days owned, unless the contract or tax year dictates otherwise.