1. What Is Per Diem Mortgage Interest?

Per diem mortgage interest is the daily interest charged on a mortgage loan balance. It represents the amount of interest that accrues each day based on your current loan balance and interest rate.

2. How Does the Calculator Work?

The calculator uses the per diem interest formula:

Where:

• \( Balance \) — Current mortgage balance in USD
• \( Rate \) — Annual interest rate in decimal form (e.g., 0.05 for 5%)
• 365 — Number of days in a year

Explanation: The formula calculates how much interest accrues daily on your mortgage balance.

3. Importance of Per Diem Interest Calculation

Details: Understanding daily interest helps with mortgage payoff strategies, evaluating refinancing options, and estimating interest charges during closing periods.

4. Using the Calculator

Tips: Enter your current mortgage balance in USD and your annual interest rate in decimal form (divide percentage by 100). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why calculate per diem interest?
A: It helps you understand how much interest accrues daily, which is useful for payoff planning and closing cost calculations.

Q2: Does this account for leap years?
A: Standard calculations use 365 days. Some lenders may use 365.25 or 360 days - check with your lender.

Q3: How accurate is this calculation?
A: It provides a good estimate, but actual interest may vary slightly based on lender's specific calculation methods.

Q4: Can I use this for other loans?
A: Yes, the same formula applies to most simple interest loans (car loans, personal loans, etc.).

Q5: How does extra payment affect per diem interest?
A: Each extra payment reduces your principal balance, which immediately reduces your daily interest charge.