Loan Servicing Question: Skipping a payment during a refinance

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Loan Servicing Question: Skipping a payment during a refinance

Account Closed
Realtor · Columbus, OH · Member since 2019 · 18 posts · 14 votes

Hello all,

I am in the middle of a refinance right now.  For reference, I usually pay my mortgage on the first and was planning to make my payment per usual on May 1st.

Since I am scheduled to close on May 7th and I technically do not have to pay until the 10th, am I okay to schedule my payment on May 10th and basically skip this payment with my old lender once I close on the 7th?  Will this impact anything with my refinance through a different or is this a somewhat normal practice?

I would essentially skip May as I close the new refinance before the grace period is over, then I will also get to skip a payment in June with my new lender.  I would then make my new payment on July 1st.

Any insights?  I sure don't want to screw anything up with my refinance.

Thanks in advance!

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  • Stephanie MedellinBusiness Member
    Mortgage Broker · CA · Member since 2014 · 1k+ posts · 642 votes
    5y

    @Account Closed  If you're planning to skip the May payment, I would not even schedule it for the 10th and then cancel - just hold off on scheduling it.  Most mortgages won't incur a late fee until the 15th (check your statement).

    Keep in mind you're never actually skipping any interest when you skip a payment.  You are still paying interest for every day that balance in outstanding, it's just rolled into the loan.  You'll pay 23-24 days of interest (to cover the rest of May) in your closing costs, and your July payment covers June's interest.

    Your loan payoff for your current mortgage will include interest to May 7th, plus a few days.  If you skip the May payment, since the May payment is actually covering April's interest,  you will just pay that interest through the loan payoff.  If you make the May payment, it will lower your payoff amount.

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  • Account Closed
    OP
    Realtor · Columbus, OH · Member since 2019 · 18 posts · 14 votes
    5y
    Originally posted by @Stephanie Medellin:

    @Account Closed  If you're planning to skip the May payment, I would not even schedule it for the 10th and then cancel - just hold off on scheduling it.  Most mortgages won't incur a late fee until the 15th (check your statement).

    Keep in mind you're never actually skipping any interest when you skip a payment.  You are still paying interest for every day that balance in outstanding, it's just rolled into the loan.  You'll pay 23-24 days of interest (to cover the rest of May) in your closing costs, and your July payment covers June's interest.

    Your loan payoff for your current mortgage will include interest to May 7th, plus a few days.  If you skip the May payment, since the May payment is actually covering April's interest,  you will just pay that interest through the loan payoff.  If you make the May payment, it will lower your payoff amount.

    Thanks for the answer, Stephanie!  I will be sure to cancel my payment due on May 1st then.

    I figured that I would be rolling the interest into my loan, but that is fine with me. I would rather borrow the interest than make a full $2,000 payment if possible.  I just wanted to make sure that it didn't mess anything up with the process of my refinance as my lender wasn't clear about it today when I spoke with him.  If the refinance were to be extended for some reason past May 15th, I would of course make my mortgage payment by then to make sure no missed payments show up on my credit history.  Thank you again!

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  • Stephanie MedellinBusiness Member
    Mortgage Broker · CA · Member since 2014 · 1k+ posts · 642 votes
    5y

    @Account Closed  As long as you made your April payment you should be fine.  It's even ok to incur a late fee for May, as long as you are closed and completely paid off before the end of the month.  Your credit history is only affected when your payment is 30 days late or more.  

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    Stephanie Medellin, Loan Factory58 Reviews
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