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      Create a Loan - Prorate Information
      • 22 May 2023
      • 3 Minutes to read
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      Create a Loan - Prorate Information

      • Updated on 22 May 2023
      • 3 Minutes to read
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      Article summary

      Errors with Prorates
      There is a known issue with this step generating errors upon loan creation. This happens when setting a loan to its pending state and attempting to go back and make changes to the loan's configuration details.
      Additionally, adding lender fees/Investments/Impound while a loan is pending is an improper process and may further cause errors on the prorate page when attempting to change the loan's configuration details.
      The pending state of a loan was established primarily as a way to set it to pending right before setting it in service, not to change details and add fees, fees/investors/impound should be added after the loan's been set in service. 

      Prorating your loan is necessary when the closing date of your loan, and the date of your first payment do not fall on the same dates as your payment frequency. For example, if you make your loan on the 15th of the month and expect your borrower to pay you on the first day of every month, you can’t expect the borrower to pay for 30 days of interest on the 1st of the month following the closing date of the loan. In this case, you would charge only half the interest for the first 15 days of the loan. You are prorating the interest for the first 15 days of the loan to allow you to get the loan on a 1st of the month payment schedule. Prorating correctly ensures that both the borrower and the lender pay their fair share for the initial abbreviated payment period.


      Bryt allows you to calculate and collect this payment either on the closing date or with the first payment.

      Bryt allows you to enter a manual prorate amount or the system will calculate the prorate amount for you. When Bryt calculates the prorate amount for you, it multiplies the number of days in your prorated payment period by your Per Diem or Daily Interest.

      For a more information, please refer to the Prorating your Loan documentation in the Bryt Knowledge base.

      Bryt Prorate Settings:

      Prorate the first period:

      • Choose “No” if you do not need to prorate the loan. Choosing “No” will make the closing date the start of the first payment period.
      • Choose “Yes” to prorate the loan.
        • For the auto-calculate option, the system will calculate the prorate amount according to the daily interest rate times the number of days in the prorate period.
        • If you want to charge an amount that is different than this, choose the manual option.

      Ending Date of the Prorate Period: 

      This is the last day of the prorate period. The next day will start the first full payment period.

      Note:
      If you'd like your payment due dates to align with the first of each month (yet have a prorate), you'll want to enter the ending date of the prorated period the day just before the 1st of the following month (on monthly payment frequency loans).
      Example: With a closing date of 1/17/23, we'll want to enter 1/31/23 to get due dates aligning with the first of each month - 2/1/23, 3/1/23, etc. 

      Collect First Prorate Payment:

      • If you choose to collect your prorate payment at closing, the system will calculate the prorate amount as a separate payment.
      • If you choose to collect your prorate payment with your first payment, the system will add the prorated amount to the borrower's first payment.
      • If you choose to collect your prorate payment at the end of the prorate period, the system will collect that prorate amount at the end of the prorate period.
      Note:
      The difference between collecting the prorate amount at closing or at the end of the prorate period is the due date the system will generate for the loan schedule.
      At closing - will set the payment's due date to the closing date the loan was set at.
      At the End of the Prorate Period - will use the day following the last day of the prorate that was entered.
      - Example: Closing date of 6/27, end of prorate on 6/30, so due date would be 7/1 for that End of Prorate payment option due date. Whereas the At Closing option would generate a due date of 6/27.

      With the First Payment - makes the prorate period show $0 due in interest but adds the interest owed to the first full pay period instead. 

      Manual Prorate Amount: 

      Enter the amount that you want to charge for the prorate period if you do not want the system to auto-calculate this amount.

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