When closing escrow on the 15th of the month with the buyer assuming the existing loan, how is the interest calculated?

When a buyer assumes an existing loan and the closing occurs on the 15th of the month, the calculation of interest must recognize the days of the month in which interest accrues. In this scenario, the buyer is credited for the interest from the 1st through the 15th, as they will be responsible for the loan payments going forward.

As a standard practice, interest for the closing date itself is typically divided between the parties involved. The seller will have owned the property for half of the month—up until closing on the 15th—so they are responsible for the interest for those first 14 days. Hence, the buyer gets credited for the first 14 days, reflecting their responsibility for the mortgage payments from that point forward.

Recognizing that the buyer will take over the loan and responsible for future payments, they receive a credit for those 14 days of interest. The seller is debited accordingly for the same 14 days since they were the ones who held ownership during that period.

This method ensures that both parties are credited and debited accurately based on the timeline of ownership and responsibility for the loan, conforming to standard prorating practices in real estate transactions.