This is a YouTube video titled "Prepaid Interest" containing an explanation about mortgage payment timing and prepaid interest at closing. The speaker discusses how mortgage payments are scheduled after closing, using examples to clarify how prepaid interest is calculated depending on the closing date. The content is educational and focused on real estate finance concepts.
When you close on your new home, there's no mortgage payments due the month of closing or the following month. For example, let's say you close in. Let's use June. It's my birthday month, best month that there is. So let's say you close in June, no mortgage payments, no payments in July. Payments start up in August, but that August payment just covers the interest for the previous month of July. So nothing ever covered that partial month of June from when you closed to the end of that month. That's what prepaid interest is. It collects that at closing. So everything's evened up. Now, let's say you close the very end of the month, June 30th. There's only one day left in the month. That's just one day of prepaid interest. Let's say it's $50 a day. For example, prepaid interest. You just collect 50 bucks of closing and you're good to go. But let's say you close on June 1st. Well, the upside is you don't have payments till August. It's a two month gap. But the downside is you have to collect that whole 30 days worth of interest right off the rip at closing. So 50 bucks a day times 30 days, it's $1,500 instead of 50 bucks. But you get to extend your first payment out for two months instead of.
