Key Takeaways
- When you refinance, you don’t truly “skip” a mortgage payment – you prepay interest at closing, so the cost is shifted rather than eliminated.
- Because mortgages are paid in arrears, your first payment on the new loan typically isn’t due for 30 to 60 days after closing, creating the appearance of a skipped month.
- By strategically choosing your closing date, you may be able to go up to two months without making a monthly payment – but you still owe for every day of interest.
- Skipping payments does not directly hurt your credit score, as long as your old loan is paid off on time through the refinance process.
- Use our break-even calculator to understand the full cost of refinancing, including prepaid interest.
Yes, it can seem like you get to skip a mortgage payment when you refinance – and technically, you won’t make a payment for at least one month. But you’re not getting a free month of housing. Instead, the way mortgage interest timing works means your payment schedule shifts, creating a gap between your last payment on the old loan and your first payment on the new loan. This guide explains exactly how it works, when you might skip two payments, and what to watch out for.
Disclaimer: This article is educational content only and is not financial advice. Wirly is not a lender or mortgage broker. Consult a qualified financial professional before making refinancing decisions.
Are Mortgage Payments Paid in Advance or Arrears?
To understand why refinancing appears to let you skip a payment, you first need to know how mortgage payment timing works. Unlike rent, which you pay in advance for the upcoming month, mortgages are paid in arrears. This means each monthly payment covers the interest from the previous month.
For example, your June 1 mortgage payment actually covers the interest that accrued during May. Your July 1 payment covers June’s interest, and so on. This “arrears” structure is the key to understanding the payment gap during a refinance.
How Does This Work During a Refinance?
When you refinance, your new lender pays off your old loan. At the closing table, you pay “prepaid interest” – sometimes called per diem interest – which covers the interest from your closing date through the end of that month. Because you’ve already paid the interest for this partial month upfront, your first payment on the new loan isn’t due until the first of the month after next.
A Step-by-Step Example
- You close your refinance on March 15. At closing, you pay prepaid interest covering March 15 through March 31.
- Your old loan is paid off. The payoff amount sent to your previous lender includes everything owed through the closing date.
- April passes with no payment due. Since your March 15-31 interest was prepaid at closing, and April’s interest will be covered by your first new payment, you have no payment due in April.
- Your first payment is due May 1. This payment covers April’s interest on the new loan (because mortgages are paid in arrears).
The result? You made your last old loan payment on March 1 (covering February’s interest), and your next payment isn’t until May 1. It looks like you skipped April entirely.
So Do You Actually “Skip” a Payment?
Not exactly. Every day of interest is accounted for. The prepaid interest you pay at closing covers the gap. You’re not saving money – you’re simply rearranging when you pay. Think of it as a payment shift, not a payment skip.
That said, the cash flow benefit is real. Having an extra month without a monthly payment can be helpful for covering closing costs or rebuilding savings after the refinance. Just understand that you’ve already paid for that “free” month through your closing costs.
Can You Skip Two Mortgage Payments?
Yes, it is possible to go two months without making a mortgage payment by strategically choosing your closing date. Here’s how: if you close at the very beginning of a month – say, March 1 or March 2 – you pay prepaid interest for nearly the entire month of March at closing. Your first payment on the new loan won’t be due until May 1.
Meanwhile, you made your last payment on the old loan around February 1 (covering January’s interest). That means you had no payment due in March or April – effectively skipping two monthly payments.
Important Considerations When Skipping Two Payments
- Higher prepaid interest at closing: Closing early in the month means your prepaid interest covers almost the full month, increasing your upfront closing costs.
- Your old loan payment timing matters: Confirm with your lender that your final payment on the old loan was received and that the payoff was processed correctly.
- No late fee risk: As long as the refinance closes and your old loan’s payoff is completed on time, you won’t incur a late fee. But delays in closing can create problems – more on that below.
Risks and Considerations
While the payment gap during a refinance can be a nice cash flow perk, there are important risks every borrower should understand.
Closing Delays Can Cause Late Payments
If you stop making payments on your old loan because you expect the refinance to close, but the closing gets delayed, you could end up with a missed payment and a late fee. According to CFPB complaint data from 2024, “trouble during the payment process” is the most common mortgage complaint across major servicers, representing the top issue for companies like Newrez/Shellpoint (71% of complaints), Mr. Cooper (66%), and Freedom Mortgage (63%). Payment processing issues during transitions are a real concern.
According to the Consumer Financial Protection Bureau, borrowers should continue making payments on their existing mortgage until they receive confirmation that the refinance has closed and the old loan has been paid off.
Resetting Your Amortization Clock
Every refinance restarts your loan term. If you’re 10 years into a 30-year mortgage and refinance into a new 30-year loan, you’ll be making payments for 40 years total. The early years of any mortgage are heavily weighted toward interest, so restarting means paying more interest over time. Use our refinance calculator to see how this affects your total cost.
Hidden Costs Borrowers Commonly Miss
- Appraisal fees: Typically $300 to $700, required by most lenders.
- Title insurance: Often required again even if you purchased it with your original loan.
- Prepayment penalties: Some home loans include penalties for paying off the loan early. Check your current mortgage terms.
- Prepaid interest: The very cost that creates the “skipped payment” adds to your closing costs.
Credit Score Impact
Refinancing involves a hard credit inquiry, which can temporarily lower your credit score by a few points. If you shop multiple lenders within a 14 to 45 day window, credit scoring models typically count these as a single inquiry. The refinance itself won’t hurt your credit score as long as your old loan shows as “paid in full” and you make your first payment on the new loan on time.
When Refinancing Does Not Make Sense
- If you plan to move soon, you may not reach your break-even point before selling.
- If the interest rate difference is small, closing costs may outweigh savings.
- If you’re deep into your current loan, restarting amortization could cost more over time.
Does It Make Sense to Put Off Payments?
The payment gap from refinancing isn’t really “putting off” payments – it’s a natural result of how mortgage interest works. However, some borrowers try to maximize this gap to free up short-term cash. This can make sense if you need funds for an emergency or to cover moving expenses.
But don’t refinance just for the payment skip. The closing costs alone typically range from 2% to 5% of the loan amount, which far exceeds one month’s payment. Make sure refinancing saves you money in the long run by comparing rates from multiple lenders.
Frequently Asked Questions
Does refinancing actually let you skip a payment?
You won’t make a mortgage payment for at least one month, but you’re not getting free housing. The interest for that period is prepaid at closing as part of your closing costs. Every day of interest is accounted for – the payment is shifted, not eliminated.
Does skipping a mortgage payment during a refinance affect your credit score?
No, as long as your old loan payoff is processed correctly and shows as “paid in full.” The payment gap is normal during a refinance. However, if closing is delayed and you miss a payment on your old loan, that could negatively affect your credit score.
Can I skip two mortgage payments when I refinance?
Yes, by closing early in the month – ideally in the first few days. This maximizes the gap between your last payment on the old loan and your first payment due on the new loan. Keep in mind that closing early in the month increases your prepaid interest at closing.
Does refinancing a car work the same way as skipping a mortgage payment?
Auto loans and home loans work differently. Car loan refinancing may also create a brief payment gap depending on the new lender’s terms, but auto loans are typically paid in advance rather than arrears. The timing and structure vary, so check with your auto lender for specifics.
Should I stop making mortgage payments before my refinance closes?
No. According to the Consumer Financial Protection Bureau, you should continue making your regular mortgage payment until your refinance has officially closed and your previous lender confirms the old loan has been paid off. Stopping early risks a late fee and potential credit damage.
Sources
- Consumer Financial Protection Bureau (CFPB) – Consumer guidance on refinancing considerations and payment timing
- CFPB Consumer Complaint Database (2024) – Mortgage complaint data by servicer, including complaint volumes and top issues
Sources
- CFPB (Consumer Financial Protection Bureau) – Official consumer protection guidelines and mortgage resources
Written by the Wirly Editorial Team. Last reviewed: March 29, 2026. Fact-checked against CFPB 2024 complaint data, CFPB consumer guidance on refinancing. See our methodology for how we evaluate lenders.