The reason that some people like to close at the end of the month is that they will need less money out of pocket at the closing. This is because they will need less “prepaid interest” on the mortgage.
Interest on the mortgage begins accruing on the date you close on your house. Since most mortgage payments are usually due on the first of the month, if you close early in the month, you will have to pay the interest on the mortgage from that date, until the end of the month. This interest will be paid in advance at closing.
On the other hand, if you close at the end of the month, say on the 29th, you will only pay a day or two of prepaid interest at closing. Interest will then begin accruing and will be due a month later. It doesn’t really cost any more to close early in the month, you just have to pay interest sooner.
If closing costs are an issue, then it is probably better to try to arrange a closing for late in the month. Keep in mind also what the seller’s needs are. The seller may not be willing to wait until the end of the month to close the transaction. In a market where houses are in great demand ( a seller’s market ), you may have to close earlier in the month to make your offer more attractive to the seller.
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