Rates are up today. Today’s rates with NO lender fees ARE 4.5% on a 30 year, 3.75 % on a 15 year and 2.75% on a 5/1 ARM. (click here to get the details).

Today’s question is from Becky in North Carolina. “Why is my payoff higher than what it shows on my credit bureau”?

Check out my answer in today’s video:

(Watch it on your mobile phone or email reader here)

Happy first day of Summer, also called the Summer Solstice! Today has the longest day and shortest night of the year. So enjoy it! Starting tomorrow the days begin getting shorter.

Thanks for the great question Becky. This is one thing I think a lot of people get confused with. When a payoff is ordered on your mortgage due to a refinance or you are closing on the sale of you home, the payoff will always be higher than what your credit report or last statement will show. This is because there is a interest per diem added to you loan balance. The per diem will increase your balance based on how long the payoff is good for.

Why a per diem? Mortgage payments are always paid in arrears or a month behind. Do you remember when you bought your house or refinanced last time? You closed on the loan and then had no mortgage payment for a month. This is where the per diem kicks in. Even though you don’t have a payment that month. Interest is being charged. So when you make July’s mortgage payment you are actually paying Junes mortgage principal and interest.

Just so you are aware, your mortgage servicer will also charge usually between 10 – 15 dollars to give you a payoff as well. Keep that in mind.

It would be awesome if you could help me in my mission to bring transparency to mortgage lending by sharing today’s episode on Facebook or Twitter. Let’s change the way people shop for a mortgage…forever!

See you tomorrow!

– Mike

PS. To ask a question, get advice, or find out what your lender is making off your loan, just post a comment below. Daily comparison rates, calculators, and other cool features are available in the free Rates in Motion LoanApp by going to your smart phone and clicking on this link, activation code is 9203780002

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