Why does moving up our closing date boost our interest rate higher than our sales agreement allows?

The APR (Annual Percentage Rate) is not the actual interest rate, but a rate calculated to include most fees, including pre-paid interest. By changing the closing date, you change the prepaid interest due. To protect consumers against last minute fee changes, Federal Lending Disclosure Laws require the delay period. Closing December 1 means you'll pre-pay 31 days of interest, and principal and interest payments start February 1. But if you close December 31, you pay only 1 day of interest. The difference in actual cash outlay is huge.