Technically, you can skip a mortgage payment when you refinance and not only one payment but two. You may have heard mortgage companies advertise this option and thought they must have some special program or pricing to be able to offer that.

But they don’t. It isn’t a special program that allows for this…it’s just simple math.

Note: Read Our Top Five Mortgage Complaints!

Can You Skip a Mortgage Payment After a Refinance?

Yes, like I said, “technically” you do not make a mortgage payment but it doesn’t mean you got something for free.

Skipping isn’t the same as free.

Here’s how it works.

Mortgages are paid in arrears which means when you make your August payment, you are paying interest for July. So, let’s say you are closing your refinance on August 10th. And let’s also say you already made your August mortgage payment.

The payoff for your current mortgage would include 10 days of interest for the month of August (the 10 days up to your closing day). And the new mortgage would collect 21 days of interest for the remainder of August.

So, July’s interest got taken care of when you made your August mortgage payment and August’s interest is paid with a combination of interest paid to your old lender and interest charged when you closed the refinance. You skip the September payment but remember September’s interest gets paid when you make your October payment which will be your first payment on the new loan.

There will be an estimate of the days of interest you will be charged on your Good Faith Estimate and a final number of days on the closing statement as part of your closing costs (prepaids and escrows) on the refinance.

How Do You Skip Two Mortgage Payments?

You are still closing your refinance on August 10th however you did not make your August mortgage payment.

The payoff for your current mortgage would then have to include all of July’s interest and the 10 days of August. Then the new lender would collect the rest of August’s interest and September’s is paid with October’s mortgage payment.

You skipped your August and September mortgage payments but they did get paid using a combination of interest to your old lender, interest paid at closing to your new lender, and your first mortgage payment for the new loan.

I wrote more on your mortgage payoff statement and another one about mortgage interest credit which is available when you close on a refinance within the first 5 days of the month. So check those out too.

Good Luck and I hope this helped!


Previous Post: «
Next Post: »

More Related Posts:

Did you like this post?
If so, please consider leaving a comment below or subscribing to the RSS feed to have future articles delivered to your feed reader or delivered by email.