How can buyers avoid paying extra prepaid interest to the mortgage company?

The correct choice is to close at the end of the month. Closing on a mortgage at the end of the month allows buyers to minimize the amount of prepaid interest they owe to the lender. This is because the interest on a mortgage is typically calculated on a daily basis. When a loan closes at the month's end, the buyer only has to pay interest for the remaining days in that month, which is usually just a few days.

By contrast, closing at the beginning or middle of the month would result in the buyer having to pay more prepaid interest for a greater number of days. Additionally, paying interest upfront does not negate the charge of prepaid interest; it simply shifts the payment method. Therefore, to avoid extra prepaid interest, closing at the end of the month is the most effective strategy.