Financing in Scottsdale>Question Details

Bridget, Home Owner in Fountain Hills, AZ

We are refinancing our FHA loan and are wondering what is the best time to close... at the beginning, middle or end of the month?

Asked by Bridget, Fountain Hills, AZ Mon Jul 16, 2012

Help the community by answering this question:


The last week of the month is the busiest time for lenders and title companies. Many people try to close the last week when they are trying to keep the amount that they come out of pocket to close escrow to a minimum.

One thing to keep in mind is this: If you close say on the 10th of August (you can do this with any month but this may make the example clearer) , you will either pay interest for the remaining days in that month, and then your first payment will be due October 1st. OR you will have an interest credit when you close (giving you a credit for the first 10 days in August, and then your first payment will be due September 1st). Regardless of which way you set this up - you pay for every day you are in the home. It is just a matter of how much you come out of pocket upfront at the title company.

When you go to sell a home that you have an FHA loan on it, you will pay for interest through the end of the month regardless when you close escrow.

Best Regards,


Ron & Brenda Cunningham
West USA Realty
Ron 602-499-0694

*** Recognized in the Phoenix Business Journal as "One of the Top 50 Realtors in the Valley"

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1 vote Thank Flag Link Mon Jul 16, 2012
Thanks to all for taking time from your busy day to respond. I will keep in mind all you have mentioned as I move forward. Thanks! --Bridget
0 votes Thank Flag Link Sat Oct 20, 2012
The closer to the end of the month, the less upfront monies you need to bring in...

Title companies are a little busier however they can handle it...

Good luck..
0 votes Thank Flag Link Fri Oct 19, 2012
Bill has explained it well. For a typical closing however, I recommend the beginning or middle of the month as the escrow companies in Arizona are not quite as busy as they are at the end of the month.
0 votes Thank Flag Link Wed Oct 17, 2012
The end of the month is usally very busy for both lenders and title companies.
0 votes Thank Flag Link Mon Jul 16, 2012

Bill's answer below is exactly correct. The agents who have answered are answering from the perspective of a purchase transaction. A refinance transaction is different since you are charged a full month's interest after the 1st of the month on the loan that is being paid off. Therefore you want to close at the very end of the month to minimize the number of days you are paying interest on both loans.

Brian Cardenas, Sr. Mortgage Banker
AmeriFirst Financial, Inc.
Mobile: 480.233.7897
0 votes Thank Flag Link Mon Jul 16, 2012
At the end of the month... Closer the better...
This will make less upfront money for you to come in with...

However if you have the dollars, close in the first or second week. You will pay interest for those days that are left in the month BUT you will not have a payment until a month after the end of the month you closed in.
Close July 15th your first payment will be Sept 1st... It feels like you are getting a month free however interest is paid at the end of the month you live there. In other words you live there and then pay....

Good luck...
Broker for A-Aa-1 Realty
480-905-8848 office
602-376-3245 cell
0 votes Thank Flag Link Mon Jul 16, 2012
Hi Bridget:

With an FHA loan, it is best to close as close to the end of the month as possible. Here is why:

To understand the answer, you need to know that we pay our mortgage interest in arrears. In other words, when you make your August payment in a few weeks, you will actually be paying July's interest due. (This is why payoff amounts are always higher than what is shown as the principal balance on your monthly mortgage statement).

Conventional loans do a per day (aka "per diem") calculation to determine how many days interest you owe on your current loan (the one being paid off). For example: close on the 20th of the month and you pay your current lender 20 days of interest.

FHA does not do this. It charges you a FULL months interest, no matter when you close your new loan. So, using that same example above, and you end up paying 30 (or 28, 29 or 31) days interest on your current loan AND you will also pay interest through the end of the month on your new loan. Causing you to pay double interest for about 10 days.

I hope this helps.

Bill Parker
NMLS #223607
0 votes Thank Flag Link Mon Jul 16, 2012
End of the month is likely the best time, avoids another months interest on your current loan and will be lower out of pocket as well.

Your lender should be able to provide exact numbers for you!

Later in the month is actually better than end, end of the month is slammed for most lenders and title companies.
0 votes Thank Flag Link Mon Jul 16, 2012
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