If the seller had a loan balance of $127,538 and an interest rate of 8.5%, what is the monthly interest prior to proration?

To determine the monthly interest on the loan, you need to apply the formula for calculating interest on a loan. The formula for monthly interest is:

Monthly Interest = (Loan Balance x Annual Interest Rate) / 12

In this scenario, the seller has a loan balance of $127,538 and an annual interest rate of 8.5%.

First, you'll convert the annual interest rate from a percentage to a decimal by dividing by 100:

8.5% = 0.085.

Next, use the formula:

Monthly Interest = ($127,538 x 0.085) / 12.

Calculating that gives:

Monthly Interest = ($10,839.73) / 12 = $903.31 (approximately).

Thus, the monthly interest prior to proration rounds to approximately $903.39. This confirms that the correct answer reflects the accurate calculation of the monthly interest. Proration typically refers to dividing amounts proportionately over a relevant time frame, but in this case, you are looking for the straight calculation of monthly interest based on the provided loan balance and interest rate.