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How Do We Calculate Per Diem Interest?

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Tony Fyler Profile
Tony Fyler answered
Per Diem Interest needs to be calculated in a specific way to guarantee the correct figures. Firstly, you need to divide the annual percentage rate by the number of days in a year which is 365. This will give you the daily interest rate for calculating per diem interest. So, discover what the APR of your mortgage is and divide that percentage by 365. If you are not aware of how to divide percentages then convert the APR percentage to a decimal by dividing it by 100.

Once you have discovered the daily interest rate then you can move onto the next step to discover the per diem interest. So, the first thing you need to do is to multiply the daily interest rate you calculated by the principal amount of your mortgage. The end result will therefore indicate the per diem interest.

Furthermore, there are ways to determine the total interest charges, and to do this you need to multiply the per diem interest you just calculated by the number of days until your first payment. So in this case you will need to record the days from when you closed your mortgage to when the first payment is due. The days you counted up in between should be multiplied by the per diem interest. This outcome will determine the total interest charges you will face.
Anonymous Profile
Anonymous answered
What is the per diem interest rate on a $310,000 mortgage for 30 yrs @ 5% interest and how is it figured out.
Aun Jafery Profile
Aun Jafery answered
Per Diem interest is the amount of interest that is earned or that accrues on a daily basis. It is determined by dividing the annual interest being charged by the number of days in a year.

This type of interest is generally charged by mortgage companies for the period that bridges the time between the closing of the loan and the end of the month. This is done to ease the administration of the loan as the loans are calculated from the first of the following month. The interest amount on per diem basis may differ depending on weather the interest is being calculated based on a three hundred and sixty day year or a three hundred and sixty five day year. The difference is generally nominal and insignificant.

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