Question

The sales price is $435,000. Interest rate is 5 3/4%. The LTV is 90%. Closing date is June 27ᵗʰ. Calculate the amount of interest the buyer is responsible for at closing. Use a calendar year. Assume no leap year

Answer 1

The buyer is responsible for $22,493.75 in interest at closing.

Step-by-step explanation:

To calculate the amount of interest the buyer is responsible for at closing, we need to determine the loan amount and the interest accrued.

First, we calculate the loan amount by multiplying the sales price by the LTV (loan-to-value) percentage:

Loan amount = $435,000 imes 90% = $391,500

Next, we calculate the interest accrued by multiplying the loan amount by the interest rate in decimal form:

Interest accrued = $391,500 imes 5.75% = $22,493.75

Therefore, the buyer is responsible for $22,493.75 in interest at closing.