VA Loan PlusCalculate Your VA Per Diem Interest
What is per diem on a mortgage? Can the seller pay it?
When
you close or settle your loan, you will pay interest on
the loan from the settlement date to the end of the
month. Per diem interest is a fancy way of saying you
are paying interest per day or per diem.
If you close on the 15th day of the month, you will pay the lender 15 days interest, assuming there are 30 days in the closing month.
If you close on the last day of the month, you will pay the lender 1 day interest. The calculation includes the closing day in the calculation.
Think of per diem interest at settlement as an interest only mortgage payment.
What Is Per Diem Interest on a Mortgage Loan?
When you sign for a mortgage or any other loan, you
pay interest on the loan along with the principal. The
lender charges you interest on the loan for the time you
have the loan. Your per diem cost starts on the day you
sign the loan papers.
The term per diem interest means daily interest.
How
to Calculate Per Diem Interest on a Mortgage
The per diem interest formula is very simple. Multiply the loan amount by the interest rate, then divide the total by 365 days. The result is the per diem cost of the loan. Now multiply the daily interest rate by the number of days in the settlement month. Here's an example of the calculation:
| Loan Amount | X Interest Rate | = Total Interest | Number of Days in a Year | Daily Interest Cost | Multiply by | = The number of days owed | Total per diem interest paid |
|---|---|---|---|---|---|---|---|
| $100,000 | 3.00% | $ 3,000 | 365 Days | $ 8.22 | X | 16 Days | = $ 131.51 |
Can I Avoid the Per Diem Interest Charge?
It's unlikely that a lender will pass on the per diem interest cost.
Try Our Amortization Calculator
Use our amortization calculator and see how fast you can payoff your mortgage with an extra payment each month. A little extra with your mortgage payment can save you a ton of interest.