Question: |
What is prepaid interest of a mortgage loan? |
Category: |
Business & Finance > Renting & Real Estate |
Keywords: |
prepaid interest, mortgage loan |
Type: |
what |
Rating: (0 ratings) Views: 48 Discussions: 0 In Watch Lists: 1 |
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Answer:
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Your first regular mortgage payment is usually due about six to eight weeks after you settle (for example, if you settle in August, your first regular payment will be due on October 1; the October payment covers the cost of borrowing the money for the month of September). Interest costs, however, start as soon as you settle. The lender will calculate how much interest you owe for the part of the month in which you settle (for example, if you settle on August 16, you would owe interest for 16 days--August 16 through 31).
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Estimated cost: Depends on the loan amount, interest rate, and number of days since settlement (for example, a $120,000 loan at 6% for 16 days, about $220; a $142,500 loan at 6% for 16 days, about $375).
Source: Federal Reserve Board
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What is prepaid interest of a mortgage loan?
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