The day of the month that you close on the purchase of your home is important and should be part of your contract negotiations. Whether you want to close early or late in the month depends whether you want to save money or ensure the process goes smoothly.
Mortgage interest is paid in arrears. The amount of prorated interest that you will pay at closing will be determined by the day of the month you close. A later date in the month means less interest paid as part of your closing costs. For example, if you were to close on May 30, then you would only pay two days of interest plus the interest due for June. Your first payment wouldn’t be due until July 1.
Because of these savings, 95% of closings occur at the end of the month. What this also means is that title and escrow companies are not as busy near the beginning of the month, and the closing process tends to go a bit more smoothly.
Photo by Towfiqu barbhuiya on Unsplash