# Can someone explain to me how a 365/360 amortization works?

Our loan docs show a $37 per month higher cost than if it was a simple amortization like you would calculate on an online calculator. This is about $7,000 more on the life of the loan. We feel a bit of "bait and switch" occurred.

### 5 Answers

- Anonymous1 decade agoBest Answer
although i have never seen it done this way... this would mean that you have a 365 month loan due in 360 months. this means that your last payment would be a baloon. it should actually make your payments cheaper.

- Anonymous1 decade ago
$7000 of interest for the life of the loan sounds correct considering its a 20-30 year loan.

365/360 Ammortization basically is the same thing- splitting up the monthly payments so that the full loan is paid through equal payments. Bankers use 360 days for the year assuming each month has 30 days, and other lenders go by the 365 calendar days.

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- Anonymous1 decade ago
First mortgage loans are always calculated using 360. Most HELOCs and 2nd mortgages are the same.There is no bait and switch here, just the application of the standard industry amortization calculation.

Source(s): 20+ years as a direct mortgage lender