Per Diem Interest

Per-diem interest is the daily interest charged on a mortgage from the day funds are disbursed at closing through the end of that month.

What Per Diem Interest means

Mortgage interest is paid in arrears, so your first regular payment does not start until the month after closing. To bridge the gap, the lender collects interest for each day left in the closing month. Closing early in the month means more per-diem days collected; closing near month-end means fewer.

Florida example

Closing a $300,000 Florida loan at 6.5% on June 5 leaves 26 days in the month. At roughly $53.42 a day, that is about $1,389 in prepaid per-diem interest collected at the table.

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