For ease of processing, most lenders prefer ALL of their payments to be made on the same day of each month (usually the 1st or 15th). When money is borrowed, the first payment is due one month from the date of advance. Unfortunately, we do not have the luxury of being able to close all transactions on the 1st or 15th of every month. So how do we deal with it?
(For simplicity we are using an example of monthly payments due on the first of the month).
Let’s say a mortgage is set to close on September 9th. Under normal circumstances, the first monthly payment would be on October 9th. But this particular lender wants all payments made on the 1st. With today’s technology, many lenders can arrange so that the first payment would be on October 1st, and simply calculate interest from September 9th to September 30th as part of the payment. But, it doesn’t always happen that way.
Instead, INTEREST ADJUSTMENT DATE of October 1st is set. The first payment will be November 1st, and will include interest from October 1st to October 31st. But the deal closed on September 9th. The problem? How do they collect the interest from September 9th to 30th? In many cases they deduct 22 days interest from the advance of funds or ask the borrower to have funds on the day of closing.
Source: 10 Steps to Becoming a Successful Mortgage Agent
Rates For
Fri, Jul 30, 2010
6:05 am
| 1 Year (Closed) | |
| CIR: 2.70 | Bank: 5.65 |
| 1 Year (Convertible) | |
| CIR: 2.70 | Bank: 5.65 |
| 1 Year (Open) | |
| CIR: 2.70 | Bank: 5.65 |
| 2 Years | |
| CIR: 3.45 | Bank: 3.65 |
| 3 Years | |
| CIR: 3.5 | Bank: 4.1 |
| 4 Years | |
| CIR: 3.89 | Bank: 5.24 |
| 5 Years | |
| CIR: 4.19 | Bank: 5.80 |
| 7 Years | |
| CIR: 5.15 | Bank: 6.0 |
| 10 Years | |
| CIR: 5.49 | Bank: 6.19 |
