Escrow & Title
A Florida seller has a mortgage with an outstanding balance of $150,000 at 4.5% annual interest. The closing is on March 15. Interest is paid in arrears. What is the seller's interest proration that will appear as a credit to the buyer?
AThe buyer gets a credit and the seller is charged for 15 days of interest✓ Correct
BThe seller gets a credit for 15 days of overpaid interest
CNo proration is needed for mortgage interest
DThe buyer is charged for the balance of the month
Explanation
Mortgage interest is paid in arrears — the March 1 payment covered February's interest. For the March 1-15 period, interest has accrued but not yet been paid. At closing, the seller owes 14 days of interest (March 1-14, depending on the closing convention). This appears as a debit to the seller and is used to pay off the mortgage. This is the mortgage payoff interest adjustment, not a buyer credit — the buyer gets no direct credit for this.
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