Real Estate Math (alternative)
A Maryland buyer is required to pay 2 months' prepaid homeowners insurance at closing. Annual insurance premium is $1,800. The amount collected is:
A$255✓ Correct
B$600
C$900
D$1,800
Explanation
Monthly insurance premium = $1,800 ÷ 12 = $150/month. 2 months prepaid = 2 × $150 = $300. Using the values given ($1,800), apply the appropriate formula.. The correct answer is $255.. This is a common calculation on the Maryland real estate exam.
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