Lisa is purchasing a condominium in Buffalo for $300,000 with a conventional mortgage. Her lender explains that her monthly mortgage payment will include principal and interest. Regarding the interest portion, when does interest typically begin accruing on her mortgage loan?
Correct Answer
A) From the closing date when loan funds are disbursed
Interest on a mortgage loan begins accruing from the closing date when the loan funds are actually disbursed to complete the purchase. This is when the borrower has received the benefit of the borrowed money and the lender's funds are at risk.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A comparison of the major mortgage loan types—conventional, FHA, VA, and USDA—covering their eligibility requirements, down payment amounts, mortgage insurance rules, and best use cases.
Predatory lending refers to unfair, deceptive, or abusive lending practices that impose unjustified terms on borrowers, often targeting vulnerable populations. It includes practices like excessive fees, inflated appraisals, and unnecessary refinancing.
RESPA is a federal law that requires lenders to provide borrowers with information about settlement costs, prohibits kickbacks and referral fees, and limits escrow account deposits. It applies to federally related mortgage loans.
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