Guys, Is it typical for a mortgage company to charge 15 days of prepaid interest during closing if you are settling at the end of the month ? I chose to close at the end of the month to avoid any prepaid interest but maybe I thought wrong.
I'm assuming your payment will be due on the 1st. If the first payment was due 45 days after close, then it would make sense. Never heard of this..is that what is happening? Did you ask why?
We settle on the 30th of May and the first payment is due July 1st which is about 31 days later. I couldn't understand the pre-paid interest either. I'm asking the loan officer whenever she gets back.
Is this on your final settlement papers or your "Good Faith Estimate"?? A lot of mortgage companies use the 15 days as an estimate for your closing costs. Check with your loan officer to see if your final settlement statement will reflect 15 days or if that was just a "ballpark figure" on the Good Faith Estimate.
edoggie Your final settlement papers, HUD1, will show only prepaid interest until the end of the month. What you are probably viewing is a GFE and really means very little. Your final settlement papers are never issued until a maximum of 48 hours before closing. Have you already gotten the appraisal, and how about your HOI? If you haven't gotten these and some other required services done, there can be no HUD1 anyway. fla-tan
Yes, you can save prepaid interest by closing near the end of the month, but you may not want to. In a refinance loan, you're also charged per-diem interest in the loan that's being paid off. Paying fewer days prepaid interest means paying more days per-diem interest, and if you're refinancing to a lower rate, you lose money on that one. On a purchase loan, closing at the end of the month saves on prepaid interest, but keep in mind that you also don't own the house for that period of time. Buying a home and moving is complex enough that I wouldn't make prepaid interest the deciding factor on the closing date.
"On a purchase loan, closing at the end of the month saves on prepaid interest, but keep in mind that you also don't own the house for that period of time." HUH? You mean I go sign my life away and I still don't own the home after the last signature ? please explain yourself.
Re: Re: pre-paid interest (mortgage ?) Yeah, I knew I didn't phrase that very well. If you close the loan on the last day of the month, you don't pay any prepaid interest, but you don't own the house until the end of the month. If you close in the middle of the month, you pay about 15 dyas prepaid interest, but you own the house for those 15 days too.
