How to Calculate Per Diem on a Mortgage

Mortgage per diem is paid at closing.

Mortgage per diem is paid at closing.

When you buy a home mid-month, your mortgage lender isn't going to let you off the hook for paying interest for your partial first month. Per diem interest on a mortgage is the interest charged for the days between closing and the end of the month. To figure how much you'll owe, you must know your interest rate and how much you're borrowing. Since per diem interest is due at closing, knowing how much that will add helps you make sure you've got enough cash on hand.

Divide your annual mortgage interest rate by 100 to find the interest rate expressed as a decimal. For example, say your mortgage interest rate is 7.3 percent. Divide 7.3 percent by 100 to get 0.073.

Divide the interest rate expressed as a decimal by 365 to find the daily interest rate. In this example, divide 0.073 by 365 to find the daily rate is 0.0002.

Multiply the daily interest rate by your mortgage balance to find the interest per day. In this example, if you are taking out a $190,000 mortgage, multiply 0.0002 by $190,000 to find the daily interest is $38.

Multiply the daily interest by the number of days left in the month when you close. For example, if you close on June 20, there are 10 days left in the month, so multiply $38 by 10 to find the total interest due at closing is $380.

 

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