Do You Skip a Mortgage Payment When You Refinance?
No, you don’t actually get to skip a mortgage payment when you refinance, even though it might seem like it at first.
What’s really happening is that your “skipped” payment gets rolled into your new loan, so you’re still paying for it over time. It’s a bit like shifting the bill — making it helpful in the moment, but not a free pass.
Why it seems like you skip a mortgage payment when refinancing
When you refinance your mortgage, your new loan pays off the old one, including any interest you’ve accumulated, so you might not need to make a payment in the month after your refinance.
Say you close your refinancing June 12 and discover you don’t owe a payment in July. It might feel like a free month, but it’s not.
Because mortgage payments are made for the previous month, your June 1 payment covered May. Any interest from June 1 until closing is added to your loan payoff, so you’re still paying for that “missing” time period — just through a new loan with a new payment date.
You may be used to making mortgage payments every month, but the month after you close, you might not need to send your lender any money. That’s because the interest you didn’t pay in the closing month was added to your new refinanced mortgage.
So you didn’t skip a mortgage payment; you just kicked the can down the road a little.
Can you skip two mortgage payments?
Some mortgage lenders advertise the chance to skip not just one, but two months of payments. This can be a risky way to access extra cash, but here’s how skipping two months might work.
Depending on the lender, there’s usually a 10- to 15-day grace period to make your monthly payment. If you know you’re going to refinance in June, you might decide to skip your June 1 payment on purpose. Once the refinance closes in June, your first mortgage payment on the new loan won’t be due until Aug. 1.
It may seem like you’ve used your grace period to skip two months’ worth of payments. But really, you’ve just delayed those payments:
- The missing June payment will be included in the loan payoff amount to your former lender, so it’s now part of the new loan.
- The first payment you make to your new lender in August will cover the month of July.
Let’s say you skip a May 1 mortgage payment, since you plan to close your refinancing within the grace period on May 12. So long as nothing gets delayed with the refinance, your first payment on the new loan won’t be due until July. You’ve “skipped” both May and June, though really both payments have actually been folded into the loan.
Risks of ‘skipping’ the last mortgage payment before a refinance
If you want to try and go two months without making a payment, you’ll need to close on the refinance before the end of the grace period, or at least by the end of the month.
You might have to make the payment anyway if your refinance closing is delayed past the grace period. Such delays don’t happen often, but it’s possible, especially if a lot of homeowners are rushing to refinance, like in 2020.
Be aware that at the end of your grace period, your lender may charge a late fee, but your mortgage payment isn’t officially considered late until after 30 days.
Still, you should probably not skip the last payment before the refinancing if any of these things are true:
- The refinance closes after the grace period for your current mortgage.
- The close or payoff date for the new loan is unclear.
- The lender hasn’t confirmed that any unpaid interest and fees are fully covered in the payoff amount.
It’s also good to know there’s no limit to how many times you can refinance. But because each one comes with closing costs, it could get expensive.
What if you need quick cash?
An alternative to skipping an extra month before your refinance is to take a cash-out refinance, where you get a lump sum of cash along with the new, larger loan.
You could shop around for mortgage refinance quotes to see if you qualify for this option based on your credit profile and available home equity. You can use LendingTree’s cash-out refinance calculator to see what your estimated monthly payments would be with this kind of loan.
Frequently asked questions
It’s usually safest to make the payment unless you’re certain your refinance will close within the grace period and the payoff includes all interest owed. Otherwise, you run the risk of being charged late fees and having your credit score drop.
Your first payment on the new loan is usually due one full month after your closing date. For example, if you close in June, your first payment is usually due Aug. 1.
If you skip a regular mortgage payment and you’re not refinancing, you could face late fees and a potential hit to your credit score after the payment becomes 30 days overdue.
Get Free Refinance Offers Now
Read more
When Should I Refinance My Mortgage? Updated December 19, 2024 Refinancing takes time and money, so it’s important to do it when you’ll get the…Read more
Avoid These 6 Common Reasons a Refinance Can Be Denied Updated May 10, 2023 If your financial situation has changed since you first bought your home, your refinance may…Read more