Pre-paid interest is one of the most confusing terms you will hear... it is quite simple once you understand it. So let me give it a try...
Now... as you look at the chart; you will see house payment due July 1st: This means when you make that payment then you are paying the interest for June in that payment. The lender will collect upfront at closing the 16 days of interest in May because that was no included in your house payment... meaning you are paying 16 days of pre-paid interest.
Now remember this will vary depending on what day of the month you close. If you close toward the end of the month you will pay less pre-paid interest and more if you close at the beginning of the month.
I hope this helps... I had to have this explained to me several times before I really understood. Now it seems very simple; if you have any questions you may leave me a comment or e-mail me. Also, if you have any questions or topics just leave them in the comments and I will do my best to answer you!
Click here for a poat on: I am Confused... Closing Costs, Pre-paids are what ?
If you have any questions contact Brenda at brenda@imsiloans.com
Integrity Mortgage Services, Inc.
Let me be your Friend in Financing!
Dale: Thank-you so much for your kind comment! My husband & I use to do homebuyers classes and I am using some of our old info and changing it for my posts. Thanks again Brenda :)
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