DEFINITION of 'Per Diem Interest'
The interest charge on a loan for one or more days. This does not necessarily mean that the interest on the loan compounds daily, per diem interest simply refers to the amount of interest that is due for one day that a loan is outstanding.
BREAKING DOWN 'Per Diem Interest'
For example, the per diem interest on a 30year, $100,000, 8% mortgage that compounds monthly (based on a 360day year) would be: ((.08/12) x $100,000) / 30 days = $22.22.
Per diem interest is calculated and paid at loan closings. It is the prorated amount of interest due for remaining days in a month. For example, if a mortgage closes on July 29, per diem interest is calculated for July 29, 30 and 31.
The first monthly payment is then due September 1 and covers interest for the entire month of August. Alternatively, if the loan closing date had been closer to the middle or beginning of the month of July, the borrower could elect to make the first monthly payment on August 1, in which case the borrower would have been credited per diem interest at closing for those days in July before the mortgage closed.

Per Diem Payments
Generally, a specified amount that employers will pay to employees ... 
Day Rate
The price/cost of a particular service for a day's period. In ... 
Required Cash
The total dollar amount that must be posted up front by the buyer ... 
Roll In
A term which refers to including loan costs into the initial ... 
Simple Interest
A quick method of calculating the interest charge on a loan. ... 
Deferred Interest Mortgage
A mortgage loan that allows the borrower to make minimum payments ...

Personal Finance
Understanding 'Per Diem'
Per diem is one method for reimbursing employees for businesstravel expenses. Companies using the per diem method must follow specific government rates. 
Investing
Explaining Interest
Interest is the price charged to borrow money, and is typically expressed as a percentage of the principal, or the amount loaned. 
Investing
4 Ways Simple Interest Is Used In Real Life
Simple interest works in your favor when you're a borrower, but against you when you're an investor. 
Personal Finance
Reduce Interest With An AllInOne Mortgage
"Offset" mortgages combine a checking account, homeequity loan and mortgage into one account. 
Insights
Simple Interest
Simple interest is a quick method of calculating the interest charged on a loan. Simple interest is determined by multiplying the interest rate by the principal by the number of periods. 
Investing
Financing Basics For Firsttime Homebuyers
If you're looking to get your first mortgage, there are many financing options available. 
Managing Wealth
Dissecting the Simple Interest Formula
Simple interest ignores the effect of compounding: it's only calculated on the principal amount. This makes it easier to calculate than compound interest. 
Personal Finance
Different Needs, Different Loans
Find out what options are available when it comes to borrowing money. 
Managing Wealth
Unsecured Personal Loans: 8 Sneaky Traps
If you are seeking a personal loan, be aware of these pitfalls before you proceed. 
Investing
Learn Simple And Compound Interest
Interest is defined as the cost of borrowing money, and depending on how it is calculated, can be classified as simple interest or compound interest.

Which is better, a fixed or variable rate loan?
A variable interest rate loan is a loan in which the interest rate charged on the outstanding balance varies as market interest ... Read Answer >> 
What is the difference between compounding interest and simple interest?
Learn about simple interest and compound interest, how to calculate the two types of interest and the main difference between ... Read Answer >> 
How can I use the correlation coefficient to predict returns in the stock market?
Read about simple interest loans, how they function, and some of the loan products or contracts that are most likely to carry ... Read Answer >> 
What are the pros and cons of a simpleinterest mortgage?
Learn the difference between a simple interest mortgage and a standard mortgage, along with their relative advantages and ... Read Answer >> 
What are some examples of simple interest loans?
Learn about two common examples of simple interest loans. Understand what simple interest is and learn why it's important ... Read Answer >>