Finance
A Washington borrower pays $3,600 in prepaid interest (per diem) at closing. This charge typically represents:
AA prepayment penalty
BDaily interest from the closing date through the end of the month✓ Correct
COne month's mortgage payment in advance
DA refundable impound deposit
Explanation
Prepaid interest (per diem interest) paid at closing covers the daily interest from the closing date through the end of the month. Mortgage payments are paid in arrears, so the first regular payment covers the following month, and the partial month's interest is collected at closing.
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