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Raghu, Other/Just Looking in 07746

What is the best time to close a house ? Starting of month, end of month or middle month.How does it?

Asked by Raghu, 07746 Tue Jan 15, 2008

What is the best time to close a house ? Starting of month, end of month or middle month.How does it affect the first ?

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I am guessing the reason you are asking is which time is better for you financially. It will always cost you the same but if you close at the end of the month it will seem like your mortgage is costing less. The reason is that in mortgages you are always paying for the previous month. Therefore, if you close on the 15th of the month, the new lender will take 15 days of interest at the closing and your first payment will begin on the first of 2 months after you close. Let me give you an example, if closing Feb 15th, you would pay 14 days of interest until the 29th and your first payment would be on the 1st of April. That is because in April you would actually be paying for March. Strange as it is that is how it works. If you closed on Feb 29 you would not need to pay the 15 days and would still start your payments on April 1. This why people think it is cheaper to close at the end of the month. Actually you are always just paying for the amount of time you actually own the property but now I hope you understand your options.
4 votes Thank Flag Link Tue Feb 19, 2008
Raghu - as others have indicated, the best time to close is when it makes sense for both the Buyer and the Seller.

However in Colorado, the amount of cash you need to bring to closing as a Buyer is typically smaller the closer you are to the end of the month. Why is that? Because the mortgages all work off of calendar months...so if you close on the 28th of a 30 day month, then you bring three days of mortgage interest to the closing table (for the 28th, 29th, & 30th). If you close on the 15th of a 30 day month, then you will need to bring 16 days of mortgage interest to the closing (the 15th through the 30th). Your first payment will become due at the end of the next calendar month.

As others have mentioned, taxes, homeowner assocaitoin dues, water/sewer, etc will all be prorated for the number of days in the month so there may be a difference in the amount but there is no adavantage given to the Seller or the Buyer for these types of expenses.

For a seller with an FHA loan, there are some ramifications for certain kinds of loans - some loans require that if the closing occurs on any day of the month, the loan interst for the entire month still needs to be paid by the Seller - so, for a Seller with an FHA loan they would rather close on the 30th of one month rather than the 2nd of the subsequent month (because they would then have to pay interest for the entire month). Most (maybe all) conventional loans do not have this characteristic.

Finally as others have mentioned, I try to avoid closings on Fridays, the day before a holiday, and the very last day of the month (because there tend to be so many closings on the last day of the month and the closing companies get jammed). I hope that helps.
4 votes Thank Flag Link Tue Jan 15, 2008
The best time to close is when it is the right time for you . It doesn't cost more or less on one day or the other, everything is paid on the day of closing. Someone mentioned to try and stay from Fridays, and they are right. The slightest delay, and you have to wait over the weekend till the next business day for your closing, Also, try and avoid the day before a bank holiday, for the same reasons.
Sharon
1 vote Thank Flag Link Tue Jan 15, 2008
Try to stay away from Fridays, though. If the funds get delayed, the closing gets postponed until the next week!
Web Reference: http://www.dianeglander.com
1 vote Thank Flag Link Tue Jan 15, 2008
No, seriously.. there is no day that is better then others. Taxes and charges are prorated to the exact day and will be given as a credit or debit to the bottom line price.

I spent many years on wall st.. and we preferred to be closed on the 1st or 15th (trades) becasue of tax purposes, it was just easier to pay a client for an item on the "paydates" rahter then the off dates and figure out the intereset accrued to that day... But that is all done for you and there really is no exact day that is better..
1 vote Thank Flag Link Tue Jan 15, 2008
THere is no "best time" the best time to close is the day you choose!
1 vote Thank Flag Link Tue Jan 15, 2008
If the seller is paying your closing costs (which happens often these days) then you want to close after the 3rd or so of the month. That way the seller pays the interest from that point to the end of the month. For instance if you close on March 5, your first payment is not due until May 1st. If you closed on Feb 28th your first payment is due Apr 1st.
0 votes Thank Flag Link Tue Oct 25, 2011
I completely agree with Sherry Rivera's answer. But I'd like to add one more point: if you close in the middle of the month, you are paying pure interest (no portions of your payment will be contributed to your payment) for those days (15 days in Sherry's example). If you are not eager to move in, I think closing in the end of the month will save you some. Of course, some will say the principle will be a low percentage of your payment anyway at the beginning. But for me personally, I will not pay that.
0 votes Thank Flag Link Wed Oct 14, 2009
Hi Raghu,
The day that is good for you is the best time, usually mortgages companies will put more in escrow for taxes and interest the earlier you close in the month but it is not costing you "extra" because you are moving in earlier.
0 votes Thank Flag Link Tue Feb 12, 2008
Different benefits depeding if you are a seller or buyer, but it all comes down when the funds are available for closing.
0 votes Thank Flag Link Mon Feb 11, 2008
I found Friday is a great day to close because as soon as the house is closed, you got the keys of new home, and you can do lots of moving or preparation during weekends to come.

Last time, I even close at the last day of my contract, so that I will have weeks ahead of me to move, and I move as I need. e.g. I sent my family over to new house first, then I move the kitchen stuff to cook the dinner, and then move some beds and covers, then we can sleep that first night, very great feeling ...

I really did not have much of boxes because everything move over right fit into the room and carbenets ...etc. at the same time, I was showing the condo, and everything seemed to be very natural. Every day, I went to old condo to do some work and move back with more items.

It took me a whole month to move everything, but at the end of the moving, it is complete, no boxes to open ...etc, and many unwanted items was sold or moved to dumpster naturally.

So, this time, when I bought next bigger home, I am probably going to do the same way...
0 votes Thank Flag Link Wed Jan 16, 2008
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