When is the best time of the month to close on a mortgage loan? The beginning, middle or end of the month? And why is it best at that time? I’m asking because I’m looking to close some time in August and wanted to know when I should try and get the closing date set to try and save more money on closing costs.
the best time to close is before your interest rate lock-in expires.
The closing costs will not change by time of the month you close, they are honestly fixed by lender, but can vary greatly by lender.
The best time to close in order to save money on closing costs is the last business day. The closing company will collect from you interest on the loan each day from closing until the end of the month. For example, say you close August 1. The number of days the closing company will collect interest from you is 31 days paid in advance and at time of closing. The interest for September will be collected from your mortgage payment due Oct 1st. Close August 31 and the closing company will collect for just 1 day.
Other costs are not dependant on the closing date. Insurance, PMI, and taxes will be collected and credited to escrow in monthly increment and not dependant on closing date.
The best time to close is probably the 3rd week of the month, because you will have to have pre-paid interest so it is better to only have to pay one week, if you try to close on the first it still will take a couple of days for everything to be settled, especially if it is a Friday, the escrow would not be recorded until Monday. That also brings up the subject of time of day, try to do it around 10 am, this will give the escrow office time to get it to the district recorder. The only fees that you will save on the closing cost is going to be for all of the pre-paid items, if your loan also has an impound for property taxes and insurance you would normally pay 3 months in advance so that when these items are due there will be enough built up in the account to make the payments.
Except you are REALLY small on money, it doesn’t matter.
Closing before the 5th of any month will have the lowest prorations of interest.
Always dodge closing on a Friday, it can cost you double interest to both lenders over the weekend. It’s throwing away money.
It is a myth that you save money by closing at the end of the month. You will pay less money (daily interest) at closing, but that is because you are occupying the home for fewer days in the month of your closing.
It will reduce your costs if you close closer to the end of the month only in that you own the home for fewer days in that month, so you do not pay the share of interest for those days that you do not have ownership.
you are pretty much at the mercy of the title companies. they set the time.