Escrow & Title
A Mississippi buyer's Closing Disclosure shows prepaid interest of $350. This represents:
AInterest charged as a penalty
BInterest on the new loan from the closing date to the end of the first month, charged at closing to establish the payment schedule✓ Correct
CThe first month's mortgage payment
DInterest on the seller's old mortgage
Explanation
Prepaid interest (per diem interest) is charged at closing for the days between the closing date and the end of the month. It ensures the first full mortgage payment is due on the first of the following month.
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