A lender uses a 365-day simple interest method. On a mortgage balance of $182,500 at 4.8% annual interest, approximately how much interest accrues per day?
Correct Answer
B) $24.00
Step 1: Annual interest = $182,500 × 4.8% = $8,760. Step 2: Daily interest = $8,760 ÷ 365 = $24.00. Using the stated 365-day simple interest method, the daily accrual is $24.00.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
A fixed-rate mortgage has an interest rate that remains constant for the entire term of the loan, resulting in equal monthly principal and interest payments throughout the life of the mortgage.
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