When refinancing, how does first month P&I work?
Let's say I close a refinance middle of the month on 15th. Do I pay interest only to previous lender for 15 says? And also interest only to new lender until next month 1st? What happens to principal payment for this month?
That’s true. Interest only for first month. So rule of thumb is don’t refi if not 0.5% drop. You also need to consider 6 month lock-in period
The point of refinance is to get better terms on your loan, not to squabble over one months interest.
Lets assume your refinance closes on April 15th for the sake of conversation and also lets assume you have made your April payment .......1) the payoff balance on the loan being paid off will include interest for 4/1- 4/15/2019 .......2) the 1st payment on the new loan will be due June 1st..,,,,,,,, ( mortgage loans are " interest in arrears " which is opposite how rent payments work
You get a principal payment holiday for the first month.
Then whats the point of refinance? It's like I paid rent that month building no equity
If that bothers you, then refinance for a lower amount, or pay extra principal later. It's a wash.