Real Estate Blog - I am Confused... Pre-Paid Interest is what?

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I am Confused... Pre-Paid Interest is what?

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!

Serving All of Tennessee!

Posted by Brenda Tressler on 08/28/2008 07:14 PM

Comments (17)

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17 Comments on I am Confused... Pre-Paid Interest is what?

AUG

2008

Howdy Brenda

I have to tell you my friend. You did not try, to explain about Pre-Paid Interest to us. You out right seceded at it.

This is another really fine written post by you, for the First Time Homebuyer and Homebuyer's a like.

I want you to know Brenda. That I am very proud of you, for the really fine blog post's that you do.

Baker Home Inspection and Consulting

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 :)

AUG

2008

Hi Brenda! Yep, Dale's right....this is another good one. The chart really helps, but the explanation is very clear and uncomplicated.

Have a great day!

Ann Allen Birmingham Realtor

Ann: Thank you so much... I am glad that it was easy to understand and Thanks so much for taking the time to leave me such a nice comment! Brenda :)

AUG

2008

Brenda,

I really like your graph about prepaid interest. Just yesterday, I had to break out a calendar to explain it.

Your graph has now been stolen for private use. :)

Richard

Richard: Thanks for the huge compliment and being such an honest thief! I am glad you find it useful... and are welcome to use anything I post. I can only do loans in Tennessee and know people in Alabama; I will be glad to send you referrals. Have a safe and Happy week-end Brenda :)

Brenda - Great post! Understanding these terms are a vital part of what we do. Your clients should be most appreciative to work with you! Great Chart!

Kay: Thank-you for such a kind comment! That means the world to me... I really care about each customer and want them to understand the process... so thanks; you have made my day! You are welcome to use anything I post if if helps your customer! Have a great week-end Brenda :)

Thanks for explaining Brenda. This has been confusing to me. Hopefully I understand now.

Pam: Thanks for taking the time to leave me a comment. I am glad it helped... I was a Realtor before I became a loan officer and so did not understand. My favorite loan officer would explain it to me... I would understand and then the next day I was calling him up and asking pre-paid interest is what? Now I am thinking why was I so confused. Have a great week-end Brenda P.S. Thanks for posting your son's picture... that means a lot to me!

AUG

2008

Brenda, thank you so much! I love the graph, and I've got to say, I did the same as Richard ("stolen for private use"), took your blog and graphic and ran with it. I am printing it and putting it in my buyer's books. It explains to them what we are talking about, since a lot of lenders unfortunately don't take enough time to explain it to the clients. This way they can see for themselves! Thanks a bunch!

Brenda,

Wow! A loan officer who knows her stuff! Thanks for a useful post, and for coming by to comment earlier on my blog. I'm adding you as an associate!

Mike in Tucson

Meli: You are welcome and Thanks for stopping by. I am working on more posts for most of the term we use; I believe the buyers should be educated to know what they are doing. It takes a little more time but it is so nice when a customer says thanks for everything! Brenda :)

Mike: Thank you for such a nice compliment, adding me as an associate and taking the time to visit me! I will be by to add you as an associate also. Have a great evening Brenda :)

SEP

2008

Brenda, I like your accurate explanation of pre-paid interest and how it applies to mortgage loans. The chart is also very helpful. Have a great day!

Rebecca: Thank you for taking the time to read my post and to leave me such a kind comment! I hope you have a great day also! Brenda :)

OCT

2008

Brenda, very good post! very informative! Thanks

Frank: Thank-you so much for taking the time to stop by and leaving such a nice comment. I am trying very hard to post info that will be helpful. Have a great day! Brenda

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