When is interest on an assumed mortgage typically paid?

Interest on an assumed mortgage is typically paid in arrears, which means that payments are made after the interest has accrued over a specific period, usually a month. This is consistent with how most mortgage payments work, where the borrower pays interest for the preceding month at the end of that month.

In the context of assumed mortgages, when a buyer assumes a mortgage, they take over the existing loan under its current terms. Since the borrower's payment schedule aligns with the standard arrears setup, the payments begin to reflect the interest that has already been incurred. This is an important concept to understand in real estate transactions, particularly in scenarios where mortgages are assumed, as it affects cash flow considerations and buyer obligations.

Other choices mention paying interest in advance, in full each year, or at closing, which do not fit the typical arrangement of mortgage payments. Interest being paid in advance would mean paying for future use of funds, whereas full yearly payments wouldn't align with standard monthly payment practices. Paying interest at closing is not representative of how interest typically accrues or is settled in an ongoing mortgage.