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We're the Consumer Financial Protection Bureau (CFPB), a U.S. government agency that makes sure banks, lenders, and other financial companies treat you fairly.

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What are prepaid interest charges?

Answer:

Prepaid interest charges are charges due at closing for any daily interest that accrues on your loan between the date you close on your mortgage loan and the period covered by your first monthly mortgage payment. 

This amount is listed on Page 2, section F of your Loan Estimate and Page 2, section F of your Closing Disclosure. These charges may change between the time you receive your Loan Estimate and the Closing Disclosure.

Note: You won’t receive a Loan Estimate or Closing Disclosure if you applied for a mortgage prior to October 3, 2015, or if you're applying for a reverse mortgage. For those loans, you will receive two forms – a Good Faith Estimate (GFE) and an initial Truth-in-Lending disclosure  – instead of a Loan Estimate.  Instead of a Closing Disclosure, you will receive a final Truth in Lending disclosure  and a HUD -1 Settlement Statement. You can find your prepaid interest charges in Box 10 of your GFE and on Line 901 of your HUD-1 settlement statement. If you are applying for a HELOC, a manufactured housing loan that is not secured by real estate, or a loan through certain types of homebuyer assistance programs, you will not receive a GFE or a Loan Estimate, but you should receive a Truth-in-Lending disclosure.

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