Skipping mortgage payments during your refinance

"You won't have to make this month's payment and you won't have to make a payment for the next 2 months." How many have heard this closing pitch when speaking with a mortgage lender?

There is no free lunch regarding mortgage interest. Your current mortgage provider will supply a payoff letter in substitution of the last month's payment (depending on when your closing is scheduled) and that payoff amount will include your "per diem" interest expense for every day till closing.

Failing to make the current month's mortgage payment when due can be dangerous. If your closing is delayed or doesn't occur at all, you could wind up with a 1x30 mortgage late on your credit report. This may make you ineligible for the rate & terms you were offered or worse - depending in your overall credit situation.

You appear to skip payments because it takes your new mortgage provider approximately 30 days to align your loan in their billing system. The interest expense before alignment typically comes from your equity and shows up on your closing statement as prepaid interest.

When you refinance after the 15^th of the month lenders may have approx 45days of prepaid interest added to your settlement statement. While you may not write the 1^st check on your new mortgage for approximately 2 months the daily interest expense is paid from the equity in your property. (refinance)

Don't just grab what appears to be the best offer. Find yourself a trusted mortgage advisor.

Greg Zaccagni @ http://www.mortgageadvisor.info/