Interest Adjustment Date
Mortgage payments are made in arrears. In other words, when each payment period is over, lenders look back and calculate their interest based on the money you owed during that period.
The interest adjustment date is the date from which your lender first starts calculating the normal ongoing interest that you’ll pay.
Interest adjustment dates tend to commonly fall on the 1st day of the month after mortgage funds are advanced to the borrower. There are some lenders that do not have interest adjustment.
For example, suppose you close your mortgage on April 25 and have signed up for monthly payments. Here is how the dates might stack up:
· April 25: Mortgage starts (a.k.a. the closing date)
· May 1: Interest adjustment date
· June 1: First payment date
Your first payment on June 1 will therefore be based on the interest that accrued since your interest adjustment date (i.e. from May 1 to May 31).
If you plan to make bi-weekly payments, then instead of one month after, your first payment would be two weeks after the interest adjustment date.
Before the interest adjustment date, however, you will have held the lender’s money for a period of time. In the example above, this period would have been April 25 to April 30.
Mortgage payments are made in arrears. In other words, when each payment period is over, lenders look back and calculate their interest based on the money you owed during that period.
The interest adjustment date is the date from which your lender first starts calculating the normal ongoing interest that you’ll pay.
Interest adjustment dates tend to commonly fall on the 1st day of the month after mortgage funds are advanced to the borrower. There are some lenders that do not have interest adjustment.
For example, suppose you close your mortgage on April 25 and have signed up for monthly payments. Here is how the dates might stack up:
· April 25: Mortgage starts (a.k.a. the closing date)
· May 1: Interest adjustment date
· June 1: First payment date
Your first payment on June 1 will therefore be based on the interest that accrued since your interest adjustment date (i.e. from May 1 to May 31).
If you plan to make bi-weekly payments, then instead of one month after, your first payment would be two weeks after the interest adjustment date.
Before the interest adjustment date, however, you will have held the lender’s money for a period of time. In the example above, this period would have been April 25 to April 30.
