Mortgage closing interest
Calculate mortgage per diem and prepaid interest
Mortgage per diem is the dollar amount of mortgage interest that accrues for one day. At closing, lenders commonly collect prepaid interest for the partial month between the closing date and the end of that month. This calculator starts with the mortgage balance and annual note rate, converts the rate to a daily amount, and multiplies that amount by the days in the selected closing period.
For a $350,000 mortgage at 6.5% on an Actual/365 basis, the per-diem interest is about $62.33. A closing on August 20 with the closing day included through August 31 has 12 interest days, producing about $747.95 of estimated prepaid interest.
Why mortgage closing dates change prepaid interest
A closing earlier in the month usually creates more prepaid-interest days because more days remain before month-end. A closing near the end of the month usually creates fewer days. That does not necessarily make one closing date financially better overall; it changes when interest is paid.
The calculator shows a typical first-payment date for orientation. Mortgage payment timing varies by lender and transaction, so use the promissory note and closing disclosure for the actual dates.
Mortgage per diem versus a monthly mortgage payment
Per-diem interest is not the same as the interest portion of a regular monthly amortized payment. A regular mortgage payment includes both interest and principal under an amortization schedule. Per-diem closing interest is a short-period calculation on the outstanding principal before the first regular payment cycle.
What to verify on a closing disclosure
- The note rate rather than a fee-inclusive APR
- The principal amount on which interest is being charged
- The lender’s 360-, 365-, or other day-count basis
- Whether the closing day is included
- The exact date through which prepaid interest is collected
Need the full mortgage amortization schedule?
After calculating the closing per diem, use Amortization Pro to create the complete payment schedule, print reports, model extra payments, or save the loan for later review.