Understanding Mortgage Interim Interest: Calculation & Payment

Mortgage interim interest refers to the interest that accrues on your mortgage between the closing date and the date of record. This is the time between when you close on the mortgage and the end of the month. For example, if you close on your mortgage on June 20 and the date of record is July 1, you would have a 10-day interim period. The interest from July would be covered by your first monthly mortgage payment. During the 10-day period, interest also accrues on the mortgage. To figure your mortgage interim interest, you need to know the amount borrowed, the interest rate and the interim period length.

Step 1

Divide the annual interest rate on the mortgage by 100 to convert it to a decimal. For example, if the annual rate equals 6.3 percent, you would divide 6.3 by 100 to get 0.063.

Step 2

Divide the annual rate expressed as a decimal by 365 to find the daily interest rate. Continuing the example, you would divide 0.063 by 365 to get 0.0001726.

Step 3

Multiply the daily interest rate by your mortgage balance to find the amount of interest that would accrue daily. In this example, if you took out a $204,000 mortgage, you would multiply $204,000 by 0.0001726 to get $35.21.

Step 4

Multiply the interest that accrues daily by the number of days in the mortgage interim period to find the mortgage interim interest. For example, if you have 12 days in your mortgage interim period, you would multiply $35.21 by 12 to get $422.52.