The full explanation
Prepaid interest is the daily interest on your loan from the closing date to the period covered by your first payment, and it can change between the Loan Estimate and the Closing Disclosure. The initial deposit into the escrow account goes in a separate section.
An example
Ignacio sees on his Closing Disclosure that prepaid interest went up a little. His closing agent explains that the closing date changed, so the number of interest days changed too.
You will see it in…
- The Loan Estimate, page 2, section F (“Prepaids”)
- The Closing Disclosure, page 2, section F
- Our closing cost calculator
