Sue is selling her house for $265,000. Closing is set for June 19, and Sue owns the day of closing. She has a loan balance of $78,000 at a 4.2% rate, and sheâ€™s current on her payments. She prepaid the property taxes ($1,350) and insurance ($925). Using a calendar-year proration method for calculations, how will these amounts appear on Sueâ€™s closing statement?
Answer: Credit of $1,214.85
Tax and insurance daily rates: ($1,350 ÷ 365 = $3.70)
and ($925 ÷ 365 = $2.53); 195 days (days from
closing until year end) = a $1,214.85 seller credit.