Video answer: 5 things to know when closing at the end of the month
Top best answers to the question «What day of the month is best to close a mortgage»
The best day to close a home purchase, or a mortgage refinance, is on the last business day of the month, unless it falls on a Monday. Then you should close on the preceding Friday so you don't have to pay interest over a weekend. Here's why. Mortgage interest is paid in arrears.
Video answer: Closing day when buying a house
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Let’s say you close on a mortgage on the fifth day of the month instead of the 30th. Your first payment wouldn’t be due until one full month has gone by. So if you closed on August 5, you wouldn’t be responsible for paying until the first day of October.
The best day to close a home purchase, or a mortgage refinance, is on the last business day of the month, unless it falls on a Monday. Then you should close on the preceding Friday so you don't have to pay interest over a weekend.
If a closing takes place on the 20th of the month, the lender will collect interest up to the first of the following month. In this example that would be 10 days. If on the last day of the month, there will only be one day’s worth of interest collected.
Your first fully amortized mortgage payment is due on the first of the month following the 30-day period after your closing date. So, if you close at the end of the month, you’ll have to start ...
If you close April 2nd, your first payment is 58 days away (June 1). Sounds great, but you will pay an additional 28 days of interest at closing ($622.22) Appears to be some significant savings - but lets do more math. With either closing date, your mortgage (loan only) payment is $954.83.
If cash is in short supply, closing as late in the month as you can can make economic sense. However, the later you close, the sooner your first full mortgage payment will be due. Here’s another example of how it works: Say you close on Jan. 28.
When purchasing a new house, it's best to close as late in the month as possible if low closing costs are your goal. You don't make your first house payment at closing, but the lender wants you to...
Conclusion: The best time of the year to refinance your mortgage is in the 4th quarter: October, November, December. The best time to refinance during the 4th quarter are the last two weeks of October and November, and the first two weeks of December.