Is paying points and per diem interest the same thing?

Question

I am trying to figure out all of the costs assosiated with closing a loan

Answer 1

Nope.

Points reduce the interest rate on the loan.

Per-diem interest is charged from the closing date to the end of the closing month. This is because mortgage payments are made in arrears unlike rent which is paid in advance. Your August 1st mortgage payment covers July. If you close in June, you have to pay the interest from the closing date through the end of June. July's interest is then paid on August 1st when your first mortgage payment is due.

Answer 2

No. Points are basically a fee added on to get the loan, and are some percentage of the total loan.

Per diem interest is interest on your loan, at the rate of the loan interest, for the days up to your first payment - after that, the interest is part of your regular monthly payment.

Answer 3

nope.

Pts are an additional cost that the lender is charging you simply to make extra money. Per diem interest is amount of interest they are requiring you pre-pay for the remaining days of the month you close. So if you close today on the 20th, your would be paying 10 days of pre-paid interest at you closing.

Answer 4

bostonian is right. And, the lender should have given you a Good Faith Estimate of probable costs.

A few days before closing, your Realtor should receive a HUD1, which lays the final costs and how much you should bring, if any, to closing. Make sure that if the Seller is paying any of the closing costs, that those you'll be paying will be the ones that are tax deductible - to you!

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