Can I Really Skip A Mortgage Payment When Refinancing?


Have you ever heard that you can skip a mortgage payment when refinancing? This is a common question we receive here at Federal Hill Mortgage. However, it’s important to debunk this common myth – skipping a payment does not mean it’s waived, but rather added to your loan balance. This understanding is crucial as it directly affects your financial future and the principal balance of your loan. Join us as we explore the true implications of refinancing, ensuring you make informed decisions with no hidden surprises.

Debunking the Myth of Skipping Mortgage Payments in Refinancing

Did you know that the idea of skipping a mortgage payment during refinancing is a widespread misconception? When you refinance, you’re essentially replacing your current mortgage, perhaps a 30-year mortgage, with a new one, possibly for a lower interest rate or a different loan term. This process can give the illusion of skipping a payment due to its timing with your monthly mortgage payment cycle. However, what actually happens is more complex. We at Federal Hill Mortgage are here to unveil the truth behind this myth, ensuring you understand the nuances and implications for your financial journey, including how your loan amount and interest rates are affected.

How Refinancing Affects Payments

Understanding how your payments change during refinancing is key. When you refinance, the timing of your new mortgage’s closing is crucial. For instance, if your refinance loan closes in mid-June, your July payment, which typically covers June’s interest, is adjusted. At closing, you cover the interest that accrues in June, giving the impression of skipping a payment in July. At Federal Hill Mortgage, we advocate a transparent approach, recommending you make this payment during closing. This strategy prevents any increase in your loan balance, safeguarding your financial future while keeping you fully informed every step of the way.

Interest Accrual and Mortgage Payments

Interest on your mortgage accrues daily. During refinancing, especially in a term refinance, you typically prepay interest for the remainder of the month in which you close. This prepayment is often mistaken for skipping a payment. Remember, whether it’s a 30-year mortgage or a term refinance, the accrued interest doesn’t pause; it’s just accounted for differently during the transition.

Mortgage Forbearance vs. Refinancing

It’s important to differentiate between mortgage forbearance and refinancing. Mortgage forbearance, often offered during financial hardship, allows you to pause or reduce payments temporarily but doesn’t eliminate the obligation to pay later. Refinancing, on the other hand, adjusts your loan terms and payment schedule. It’s an opportunity to refinance your mortgage into a home loan with more favorable terms, impacting your monthly mortgage payment and overall loan amount.

Final Thoughts: Making Informed Decisions with Federal Hill Mortgage

As we’ve explored, refinancing your mortgage with Federal Hill Mortgage doesn’t mean you can literally skip payments. It’s about understanding how your payment schedule, principal balance, and loan options are affected. We guide you through the refinancing process, from the moment your loan closes to when your first payment is due, ensuring you make decisions that align with your long-term financial health.

Ready to Refinance? Let's Talk

If you're considering refinancing in MD, DE, PA, VA, DC, NC, or TX, connect with us at Federal Hill Mortgage. Our experts are here to provide tailored advice, helping you navigate your refinancing journey with confidence. Contact us today, and take the first step towards a smarter financial future.

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The Federal Hill Mortgage Team is here to supply you with all the information you need to shop for a mortgage that's right for you.