David Saks: January 2015

David Saks - Real Estate Broker - The Real Estate Mart of Tennessee, Inc. - 4040 North Watkins-Suite #4 - Memphis, Tennessee 38127 - Phone (901) 357-4663

Real Estate Practice : Lesson 3901

math

At settlement on June 15, 2005 a purchaser assumes the existing mortgage 0f $450,000 which has an annual interest rate of 5% and has been paid up to December 15, 2005.

How much is the pro-rated amount due at settlement?

Is the pro-rated amount of the interest a debit or a credit to the purchaser ?

wildlife

A. $11,250 which is a credit to the purchaser.

If the existing mortgage is 450k, the interest we want to calculate is the exisiting amount for the remaining six months of the loan balance when the loan is assumed.

June 1 to December 1, 2005 is six months so lets divided 450k by twelve months to get $37,500 and multiply 37.5k times six months remaining to get $225,000.

Now, let's find out what the interest on 225k is at 5% for six months by multiplying .05 times 225,000, and we get $11,250.

A credit to the purchaser.

A colorful example of calculating real estate finance proration.




David Saks



Time&Temp Memphis

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Comment balloon 0 commentsDavid Saks • January 12 2015 01:00AM
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At settlement on June 15, 2005 a purchaser assumes the existing mortgage 0f $450, 000 which has an annual interest rate of 5% and has been paid up to December 15, 2005. How much is the pro-rated amount due at settlement? Is the pro… more
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