How Do We Calculate Per Diem Interest?

Per Diem interest is the amount of interest that is earned or that accrues on a daily basis. It is determined by dividing the annual interest being charged by the number of days in a year.

This type of interest is generally charged by mortgage companies for the period that bridges the time between the closing of the loan and the end of the month. This is done to ease the administration of the loan as the loans are calculated from the first of the following month. The interest amount on per diem basis may differ depending on weather the interest is being calculated based on a three hundred and sixty day year or a three hundred and sixty five day year. The difference is generally nominal and insignificant.

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