An Ohio property closes on April 11. The seller has a mortgage with a balance of $180,000 at 5% annual interest. Interest is paid in arrears, and the seller's last payment covered interest through March 31. Using a 360-day banker's year and charging the seller for the day of closing, how much accrued interest must the seller pay off at closing?
Correct Answer
B) $275.00
Daily interest = $180,000 × 5% / 360 = $25/day. From April 1 through April 11 (closing day included) is 11 days × $25 = $275.00.
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Related Topics & Key Terms
Key Terms:
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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An Ohio property has an assessed value of $140,000. The local tax rate (millage rate) is 80 mills. What is the annual property tax?
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A seller in Ohio sells their property for $350,000. The seller has an existing mortgage balance of $220,000, pays a 6% total commission, and pays the state and maximum county conveyance fee ($1.30 per $1,000). What are the seller's approximate net proceeds before other closing costs?