Prepaid interest

[RogerM]

What is the name of your state?
California

I just closed my refinance and noticed the following charges in the closing costs.

Prepaid interest to New lender: 01/23 - 1/30 = $x
Residual interest to Old lender 01/01 - 01/28 = $y

This sounds like I am being charged interest for some overlapping time(5 days 1/23 - 1/28) from both the lenders. Is this legal? Why should I be paying double interest?

Thanks

Roger

 

[HomeGuru]

Double check with both lenders.

 

[Thomas234]

As you may have seen, I have my own battle going in a similar situation.

Based on what you have written, it sounds as if you closed on your new mortgage 1/23? It is my understanding, in Illinois at least, one has three business days to rescind on a mortgage. As such, the payoff to your old lender will not be "overnighted" to them until after that period has passed. Which means they won't receive the payoff until 1/28.

My speculation would be that the old lender will then refund to you the interest you paid at closing for the period of 1/23 to 1/28. Or they may simply hope you don't notice, and keep the money.

But you do need to definitely look into this.

 

[HomeGuru]

Writer: what was the outcome?