A borrower in Anchorage obtains a $320,000 deed of trust loan at a fixed annual interest rate of 6%. The loan is interest-only for the first year. During the first full month of the loan, what is the borrower's interest payment?
Correct Answer
A) $1,600
Step 1 — Calculate annual interest: $320,000 × 6% = $320,000 × 0.06 = $19,200 per year. Step 2 — Calculate monthly interest: $19,200 ÷ 12 = $1,600 per month. The first month's interest-only payment is $1,600. This reflects how interest accrues on a deed of trust loan in Alaska, where the deed of trust is the primary security instrument under AS 34.20.070.
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Related Topics & Key Terms
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Related Concepts
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
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Previous Question
A broker in Anchorage is holding a $15,000 earnest money deposit in her trust account. The transaction falls through and the buyer cannot be located after repeated attempts. Under Alaska law, what must the broker ultimately do with these unclaimed trust account funds?
Next Question
Under Alaska's Deed of Trust Act (AS 34.20.070–34.20.135), which of the following is NOT a required party to a deed of trust?