|
What is Prepaid Interest?
This is interim interest that accrues on the mortgage loan from the date of the
settlement to the beginning of the period covered by the first monthly payment.
Since interest is paid in arrears, a mortgage payment made in June actually pays
for interest accrued in the month of May. Because of this, if your closing date
is scheduled for June 15, the first mortgage payment is due August 1. The lender
will calculate an interest amount per day that is collected at the time of closing.
This amount covers the interest accrued from June 15 to July 1.
<< Back
|