Check Your Understanding Answers
- What does prorated mean?
Divided proportionately between the buyer and the seller
- Name three items that are prorated for closing.
The most common items that are prorated include taxes, insurance, mortgage interest, and utilities.
- How are prorated items shown on the closing statement?
As a debit to one party and a credit to the other party for the same amount
- Closing agents and lenders typically use one of two methods when calculating items that need to be prorated. Name the two methods.
The 12- month/360 day method and the 365 day method
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