Per Diem Interest

The interest charge on a loan for one or more days. This does not necessarily mean that the interest on the loan compounds daily, per diem interest simply refers to the amount of interest that is due for one day that a loan is outstanding.

For example, the per diem interest on a 30-year, $100,000, 8% mortgage that compounds monthly (based on a 360-day year) would be: ((.08/12) x $100,000) / 30 days = $22.22.

Per diem interest is calculated and paid at loan closings. It is the pro-rated amount of interest due for remaining days in a month. For example, if a mortgage closes on July 29, per diem interest is calculated for July 29, 30 and 31.

The first monthly payment is then due September 1 and covers interest for the entire month of August. Alternatively, if the loan closing date had been closer to the middle or beginning of the month of July, the borrower could elect to make the first monthly payment on August 1, in which case the borrower would have been credited per diem interest at closing for those days in July before the mortgage closed.


Investment dictionary. . 2012.

Look at other dictionaries:

  • per diem — per di·em 1 /pər dē əm, dī / adv [Latin]: by the day: for each day paid per diem per diem 2 adj 1: based on use or service by the day per diem compensation 2 …   Law dictionary

  • Per diem — Per Per, prep. [L. Cf. {Far}, {For }, {Pardon}, and cf. {Par}, prep.] Through; by means of; through the agency of; by; for; for each; as, per annum; per capita, by heads, or according to individuals; per curiam, by the court; per se, by itself,… …   The Collaborative International Dictionary of English

  • Per — Per, prep. [L. Cf. {Far}, {For }, {Pardon}, and cf. {Par}, prep.] Through; by means of; through the agency of; by; for; for each; as, per annum; per capita, by heads, or according to individuals; per curiam, by the court; per se, by itself, of… …   The Collaborative International Dictionary of English

  • Per annum — Per Per, prep. [L. Cf. {Far}, {For }, {Pardon}, and cf. {Par}, prep.] Through; by means of; through the agency of; by; for; for each; as, per annum; per capita, by heads, or according to individuals; per curiam, by the court; per se, by itself,… …   The Collaborative International Dictionary of English

  • Per cent — Per Per, prep. [L. Cf. {Far}, {For }, {Pardon}, and cf. {Par}, prep.] Through; by means of; through the agency of; by; for; for each; as, per annum; per capita, by heads, or according to individuals; per curiam, by the court; per se, by itself,… …   The Collaborative International Dictionary of English

  • Per centum — Per Per, prep. [L. Cf. {Far}, {For }, {Pardon}, and cf. {Par}, prep.] Through; by means of; through the agency of; by; for; for each; as, per annum; per capita, by heads, or according to individuals; per curiam, by the court; per se, by itself,… …   The Collaborative International Dictionary of English

  • Required Cash — The total dollar amount that must be posted up front by the buyer to close a mortgage or to refinance an existing property. The required cash amount can include any of the following amounts if they are requested at closing: Any down payment… …   Investment dictionary

  • Roll In — A term which refers to including loan costs into the initial principal balance of a loan. This is a common practice by mortgage borrowers who do not have funds available, or who do not want to pay loan costs out of pocket. While most loan costs… …   Investment dictionary

  • Colorado House career of Douglas Bruce — The Colorado House of Representatives career of Douglas Bruce began with Bruce s appointment to a vacant legislative seat in November 2007 and his swearing in in January 2008; he was a focal point of controversy during his one term in the state… …   Wikipedia

  • Sarah Palin — Sarah Palin …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.