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I'm scheduled to close next Thursday the 31st, however it's not written in stone because the lender is waiting on an updated pest inspection report, which they should be receiving today. Loan officer said if they receive it today, then we should make closing on Thursday.
I know if we close on Jan. 31st my first payment will be due March 1s, and if we close, say, Feb. 1, the first payment won't be due until April 1st. In that regard, it might be better to push closing until Feb. 1st. However, my question deals with the daily interest. Would I be paying more in daily interest at closing if I closed on Feb. 1st than if I closed on Jan. 31st?
I have a hard time understanding how the daily interest works, so I'm just wondering which would be easier on my pocketbook at the closing table.
You want to close on the 31st if you are wanting to bring less cash to the table on closing day.
Im closing on the 2nd to give me some room till the next payment.
@cclee wrote:You want to close on the 31st if you are wanting to bring less cash to the table on closing day.
That's what I figured. I guess it's a toss up on whether I want to bring less cash to closing, or wait another month before my first payment is due. I'm inclined just to let the cards fall however they may.
I like the early month closing, because I know my Wife will be telling me we need this and that for the house and having a nice gap in the payment will help.
The end of the month is good to for property taxes that are prorated and any kind of HoA dues
If you are a seller, you don't want to leave it to the last moment to close if you have an FHA loan. The reason is this: if you close the last day of the month, the buyers funds are then disbursed to your existing lender within 24 hrs. which is the first of the next month. So in your payoff you end up having to pay an entire months worth of interest for that following month even though you closed the day before. This is because FHA won't prorate the last month. They are the only type of loan that won't pro-rate the last month so if you have any other type of loan, it is not a factor. So, if you have an existing FHA loan, allow enough time to close AND enough time to have the proceeds sent to your lender for payoff and processing your payoff. Allow at least a couple of working days after your closing.
For the buyer, as pointed out above there are pros and cons to closing early in the month and late in the month. Personally, I prefer to close early in the month (First or Second week) and to close mid-week (Tues/Wed/Thursday) rather than a Monday or a Friday. In most title companies Monday's and Friday's are crazy busy so the chance for error increases.