Per diem interest calculator
What is per diem interest at a Florida closing?
Work out the interest at closing
By the ordinary conventions; the lender’s statement governsPer diem interest, by the ordinary conventions
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Enter a closing date to see the days each side carries.
The short answer
Per diem interest is one day’s interest on a loan: the balance times the annual rate, divided by the days in the lender’s year, 365 for most and 360 for some. At a closing it appears twice. The seller’s payoff carries interest from the 1st of the month through the closing day, because mortgage interest is paid in arrears; the buyer prepays interest from the closing day through the end of the month. On a closing on June 15 with $250,000 paid off at 6.5% and $400,000 borrowed at 6.5%, that is $667.80 in the seller’s payoff for 15 days and $1,139.68 of prepaid interest for the buyer’s 16. Each day the closing slips costs the seller $44.52 more.
Source: Bayit Title, https://bayittitle.com/closing-costs/per-diem-interest-calculator
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A day of interest at common balances
On a 365-day year. A 360-day year makes each figure about 1.4% higher.
| Balance | 5% | 6% | 7% |
|---|---|---|---|
| $200,000 | $27.40 | $32.88 | $38.36 |
| $300,000 | $41.10 | $49.32 | $57.53 |
| $400,000 | $54.79 | $65.75 | $76.71 |
| $500,000 | $68.49 | $82.19 | $95.89 |
| $600,000 | $82.19 | $98.63 | $115.07 |
| $800,000 | $109.59 | $131.51 | $153.42 |
Balance × rate ÷ 365. The lender’s payoff statement or Closing Disclosure governs.
Why the payoff has interest in it
A mortgage payment pays for the month that has just ended: the payment due on June 1 covers May. A seller closing on June 15 has paid for May and nothing for June, so the payoff statement adds fifteen days of interest to the principal, at the per diem. The statement is usually written to a date a little past the closing, for the time a mailed or wired payoff takes to arrive, and whatever is not needed is refunded afterwards. The payoff comes off the seller’s proceeds on the seller net sheet.
Why the buyer prepays interest
The new loan starts on the closing day. Its first monthly payment is ordinarily due on the 1st of the month after next and covers the first full month; the days from closing through the end of the closing month would otherwise go unpaid, so they are collected at closing. The Closing Disclosure lists them as prepaid interest, in the prepaids with the first year’s insurance. The later in the month the closing, the fewer days there are.
What a day’s delay costs
A closing that moves a day moves both figures by one per diem: the seller’s payoff grows and the buyer’s prepaid interest shrinks. Over a week or two of delay the seller’s side adds up, which is one reason the contract’s dates matter. The FAR/BAR deadline calculator puts every date in the contract on a calendar, and the Florida closing timeline guide walks the weeks from contract to closing.
Common questions
What is per diem interest?
One day’s interest on a loan: the balance multiplied by the annual rate and divided by the days in the lender’s year. On $400,000 at 6.5% that is $71.23 a day over a 365-day year, or $72.22 over a 360-day year. At a closing it is what each day between a payment date and the closing date costs.
Why does the seller’s payoff include interest?
Because mortgage interest is paid in arrears: the payment due on the 1st pays for the month that has just ended. A loan paid off on the 15th has run fifteen days into a month nobody has paid for yet, so the payoff statement adds those days at the per diem. Lenders add days for the time a mailed or wired payoff takes to arrive and refund any overage afterwards.
Why does the buyer prepay interest?
For the same reason, from the other side. The new loan starts on the closing day, and the first monthly payment, ordinarily on the 1st of the month after next, will cover the first full month. The days from closing through the end of the closing month would otherwise go unpaid, so they are collected at closing as prepaid interest, which the Closing Disclosure lists.
Is per diem interest worked on 365 days or 360?
Either, by the lender’s own convention. Most payoff statements divide the annual interest by 365; some lenders divide by 360, which makes the per diem a little higher. The statement says which, and the calculator switches between the two.
What does a closing that slips a day cost?
A day of per diem on each side: on the example above, $44.52 more in the seller’s payoff, and the buyer’s prepaid interest moves by $71.23. Closing earlier in a month lowers the seller’s payoff interest and raises the buyer’s prepaid interest; closing later does the reverse.
Is it cheaper to close at the end of the month?
For the buyer’s cash at closing, usually: a closing on the last day of the month carries one day of prepaid interest, and the first payment is not due for a month and a day. The interest itself is not saved, only moved into the regular payments; and the seller’s payoff carries a whole month of it.
Which figure binds, this page’s or the lender’s?
The lender’s. The payoff statement sets the seller’s figure and the Closing Disclosure the buyer’s; both are produced from the lender’s own records and conventions. This page is arithmetic by the ordinary conventions, for reading those documents and for seeing what a date changes.
What else is on the statement
Interest is the smallest of the lines a closing date changes. The property tax proration turns on the same date; the title insurance calculator and the doc stamp calculator price the lines that do not; and the Florida closing cost calculator puts those on one card.
Every figure on this page is arithmetic on what was entered, by the ordinary conventions named beside it; no statute or rule sets a per diem. The lender’s payoff statement and the Closing Disclosure state the figures that bind. This page is not lending or tax advice.