If the buyer of a home assumes the seller's loan balance and is responsible for interest payments, when should the buyer expect to receive a credit for interest?

The buyer can expect to receive a credit for interest at closing because this is when the financial transaction is finalized and the ownership is officially transferred. During the closing process, various financial adjustments are made, including the allocation of interest payments on the seller’s loan that the buyer assumes. The interest is typically prorated to reflect the specific closing date, meaning the buyer will receive a credit for any interest that accrues from the day of closing until the end of the month, based on the loan terms.

This credit ensures that the buyer does not pay interest for the days that the seller holds the loan after closing, providing a fair financial adjustment. By structuring it this way, it helps to clarify the financial responsibility tied to the loan and ensures that both parties are fairly compensated for the interest expense.

The other options do not accurately reflect the standard procedures followed during real estate transactions. For example, receiving a credit at the time of the down payment would not account for the accrual of interest until closing. Similarly, waiting until the loan is paid off delays any credit adjustments that would be necessary during the ownership transition. Lastly, waiting three months of occupancy does not align with common practices regarding proration and financial adjustments at the closing.