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Why should I close at the end of the month?

  • December 10 2012 - US
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Answers (6)

It will reduce your upfront closing costs in the form of prorated interest ad HOA fees.  With interest rates so low the prorated interest will not impact you as much as when they are higher.  Check with your lender before writing your offer to purchase and let them tell you a realistic time and date to close. Closing at the end of the month is a busy time for closings so you may want to expect a delay, but don't go over your contract date.  That is the most important date to remember.  I hope this helps you, good luck on your purchase.

  • December 10 2012
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It will reduce your upfront closing costs in the form of prorated interest and HOA fees. That is the only reason I can see why someone would close at the end of the month. It is usually a busier time for closings, so turn times from escrow companies, recorder's offices etc. can be longer. 

Good Luck!
  • December 10 2012
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Profile picture for Ofe Polack
It has to do with the proration, Tim and Rachael explained it very clearly by illustrating their example.  You can discuss it with your lender and closing company before you write an offer. 
  • December 10 2012
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Profile picture for Outer Banks N C
I assume you are being told that you should close at the end of the month. You don't have to, but here is the reason you will often hear that suggestion. It is to save you some money out-of-pocket but it really is a moot point to some.

When you close, for example the middle of the month, the first payment will be next month. You have to pay the prorated payment amount for the current month at closing and then the first full payment will be at the end of the next month or due the 1st of the month after next. Since you have to pay for 15 days of the current month it is cheaper to close at the end of the month so you are paying 1 or 2 or 3 days rather than in the middle and paying 15 days worth of prorated payments. That prorated amount is added to the closing costs you need to pay at closing so closing the 29th will have less closing costs than closing on the 15th.
  • December 10 2012
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Profile picture for craigfial
Reduced pre-paid interest and other expenses to reduce your closing costs.  if you close at the beginning of the month, you will have to pre-pay all of the interest, taxes, insurance, HOA fees to the end of the month.  Could add several thousand to your out of pocket closing costs. 
  • December 10 2012
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If you have a rate lock, it is important to close before that lock expiration unless you think the rate will go down further. Your purchase contract also specifies timelines for closing. The sooner you can close is often seen as a benefit to the seller. With regard to your mortgage payments, most banks will allow you to pick your monthly payment date so the date of your closing won't impact that too much.
  • December 10 2012
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