Question

The closing agent will deduct the balance due on the seller's loan at closing plus any accrued interest. The unpaid balance is $115,400 with a rate of 4%. Based on a closing date of June 15, the amount deducted will be_____

A) $123,478.00.
B) $115,592.33.
C) $115,207.67.
D) $115,952.33.

Answer 1

This mathematical question involved calculating the accrued interest on a loan balance at the time of real estate closing. An exact answer cannot be given without knowing the exact number of days since the last payment.

Step-by-step explanation:

The subject in question involves real estate finance, specifically calculating the interest accrued on a seller's loan balance at closing. The loan has a balance of $115,400 with an annual interest rate of 4%. To calculate the accrued interest from the last payment to the closing date (June 15), we need to know how many days that period is and consider that interest for a standard mortgage is calculated on a monthly basis.

Assuming closing is mid-June and the last payment was at the end of May, the seller would have 15 days of interest to pay. The monthly interest rate is 4% divided by 12, which is approximately 0.3333% per month. To find the daily interest rate, divide the monthly rate by 30 (the average number of days in a month), resulting in a daily rate of 0.01111%. Multiplying the daily interest rate by the balance by the number of days gives us the accrued interest. To that, we add the principal to find the total amount deducted at closing.

Without an exact number of days from the last payment to the closing date, we cannot provide a definitive answer, but we can calculate an estimate based on this information.