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sergiy2304 [10]
2 years ago
8

Buyer Maria and seller Doug are closing on June 1. Maria’s mortgage loan is $927.86, and $871.86 will go to interest in the firs

t month. Maria will have to pre-pay interest for June using the 360-day proration method. What will her prepaid interest cost be at closing?
Business
1 answer:
ikadub [295]2 years ago
4 0

Answer:

$842.74

Explanation:

Data provided in the question:

Loan amount = $927.86

Interest for the first month = $871.86

Now,

Daily interest rate for 30 days =  \frac{\textup{Interest for a month}}{\textup{Total number of days in a month}}

or

=  \frac{\$871.86}{30}

=  $29.06

Now,

Doug owns the closing day,

Therefore,

Maria will pre-pay interest for 29 days i.e June 2 - 30,

= Daily interest × Number of days

= $29.06 × 29

= $842.74

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