Complaint Review: Household Finance and Mortgages

I am trying to refinance my mortgae, when I called for my payoff balance I was told that i owe $ 118,040.37. the problem is that I only borrowed $ 115,000.00 a year ago. I have made my payments every month. I was told that I am being charge daily interest between payments that are received. For example I make a payment on 1-14-00 for January I then make a payment on 2-20-00 for Febuary, because there is more than 30 days between payments received I am being charged $ 38.27 a day over 30 days even thoughmy payment is not late.This amount is then tacked on to the end of my loan. I am not sure this is legal, but if it is, it's definitely not ethicle. I was never told until now that my loan would work this way, if I had any ides that this is how it would work I would never have agreed to the contract. Please let me know if anyone else has had the same problem. I have spoken to a few "mortgage " educated people and have been told that what they are doing could be illegal.