<prompt> Human: Preparing to close on my first home soon and included on the closing costs is a line item for prepaying interest between closing and the first monthly payment. Apparently this is a normal thing, but nothing Ive read explains why. If i stumbled on a bag of cash the day after closing and paid the whole thing off, no interest would have accrued. Why do I need to pay interest in advance? I feel like Im a smart person but the existence of this baffles me.  <response>: Because monthly payments are fixed and the amount of time between the loan origination and first months payment varies from loan to loan. Your monthly payment pays the interest between payments with the remainder going to principal. 