A buyer is purchasing a home in San Diego for $650,000. The buyer is putting 20% down and obtaining a 30-year fixed mortgage at 6.5% annual interest. The lender requires the buyer to prepay the first month's interest at closing. What is the prepaid interest amount for one month?
Correct Answer
D) $2,816.67
Step 1: Calculate the loan amount: $650,000 × 80% = $520,000. Step 2: Calculate monthly interest: $520,000 × 6.5% ÷ 12 = $520,000 × 0.065 ÷ 12 = $33,800 ÷ 12 = $2,816.67.
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Related Concepts
Intestate succession is the legal process by which a deceased person's property is distributed according to state law when they die without a valid will. State statutes determine the order of inheritance.
Marketable title is title that is free from reasonable doubt as to who the owner is and free from liens, encumbrances, or defects that would cause a reasonable buyer to hesitate before purchasing. It is also known as merchantable title.
Probate is the legal process by which a deceased person's will is validated by the court and their estate is administered, including the transfer of real property to the named beneficiaries or heirs.
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