*note - I wasn't scrutinizing YOU, this is just the kind of thing my brain loves to dive into over morning coffee. Yes, I might be nuts!
The payoff is calculated through 11/27, but the interest adjustment begins 11/30 - that math doesn't work. The int adj would begin on the date of funding - and the p/o would need to be calculated at LEAST to that same date, or it will be short. Normally a couple/3 days of interest are added to the p/o (from funding date) to ensure the amount is sufficient.
The interest adjustment is the interest from the date of funding to the last day of the month before the month before the month of the first payment. LOL - easier:
Funding date: Nov 30
First payment date: Jan 01
Month BEFORE first payment: Dec
Int Adj: Nov 30 (the day you get their money) - Nov 30 (day before Dec 1, which is the month before the first pymt month)
Here's where the misnomer raises it's head: The interest of each payment is for the 30 days prior, so when the Dec payment is "skipped", it is ONLY the principle. The first payment on Jan 01 will include Dec's interest.
This is a favorite of L.O.'s - "You're saving $xxx because you won't make a payment in Dec." Incorrect! Foul, I cry! If the full pymt is $1626, then ballpark (since I don't have the terms) using 30 years/5.5% is an amortization of $590 in principle (the ONLY "skipped" portion) and $1036 in interest which WILL be paid in the Jan pymt. You can't deduct the entire amount as any sort of "saved" dollar amount.
In this example, it shows int from 11/30 through 12/01. We'll assume it really means up TO 12/01 because it would be a double-charge of interest for 12/01 otherwise.
Then we get to the escrows - math doesn't work there, either. He had an escrow acct, it would've had the funds to pay Dec taxes. He's paying Dec taxes up-front, got it. What happened to the funds for Dec taxes in his existing escrow - OR, is the Dec tax BOTH calculated into the new escrow AND being paid up-front (looks like, to me).
My math, with regard to "no costs" disregards tax pymts & escrows (both sides), because they are not loan "costs". IMO they shouldn't be subtracted from the p/o in the 'no costs' calculations, nor should they be an added factor.
Payoff = 241,846 (using their own date Nov 27)
New Loan = 242,729
Increase = 883
Fees shown= 867 (diff of 16, could you have missed a Flood Cert fee?)
Int adjustment included in fees - in keeping with interest being included in pay/off.
Dec - skipped principle = est. 590
Difference between the loan amount increase and the skipped principle is 293 - and none of this factors in the fact that 883 MORE dollars than before, will be accruing interest.
Bottom line - there are no free lunches, and I'm certifiably insane because I actually had fun doing this. =) |
