Often times, when you buy a property, there’s a gap between your home’s closing date and the day in which your lender withdraws your first mortgage payment from your bank account. During those in-between days, interest is accumulated on the money you owe, and a mortgage interest adjustment is required to balance out the equation. 


A mortgage interest adjustment is one of many closing costs that homebuyers have to pay leading up to, or on, your scheduled closing day. This happens when your closing date falls before your first scheduled mortgage payment. While this charge typically doesn’t amount to a lot of money, it’s still important to plan for an interest adjustment when budgeting for closing costs. 


If, for instance, your closing date is set for November 15th, this is the day your lender needs to advance your mortgage funds so that your real estate lawyer can pay the seller. Your first mortgage payment isn’t being withdrawn until December 1st – 15 days after your mortgage is advanced. Even though you’re not scheduled to make your first payment until December 1st, interest starts to build on your November 15th closing day.


To avoid paying an interest adjustment, you can request that your lender schedules your first mortgage payment closer to your closing date.


There are often different ways that you can pay your interest adjustment, including:

  • Pay on closing day – either pay your lender with cash or have it deducted from your mortgage loan before the funds are advanced to you
  • Ask your lender to withdraw it from your bank account on the interest adjustment date
  • Add the cost to your first scheduled mortgage payment


Have questions about mortgage interest adjustment or other closing costs you can expect to pay? Answers are a call or email away!