Interest on mortgages always accrues in arrears. This means your December 1st mortgage payment covers interest that accrued in November. In contrast, a December 1st car payment will cover interest that will accrue in December.
For a purchase, borrowers pay interest through the end of the month, and then skip a payment. Hence, if a purchase is closing December 19th, the borrower will pay interest at close (in escrow) through December 31st. She will have NO January mortgage payment b/c there will be no interest in arrears (it was pre-paid at close). The first payment will be due on February 1st.
For refi’s borrowers pay interest on the old loan through the date of close, and on the new loan through the end of the month (and then skip a payment).
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