The Benefit of Closing at the End of the Month!

Closing a real estate transaction at month end mainly means lowering your out of pocket expenses at the time of closing. The bulk of these expenses comes from "prepaid interest" that you pay on your mortgage.

Most loan payments are due on the first day of the month. Since interest on your mortgage begins from the date your transaction closes, you may be required to "pre-pay" interest between the closing date and the end of the month.

Here are a couple of scenarios:

If you plan to close on your home on the 29th of September, you would be required to bring in one day's worth of prepaid interest at the time of closing to cover September's interest. After you close, you would make your first mortgage payment on November 1st, where you would be paying October's interest.

If you plan to close this coming Friday (October 2nd), you would prepay 29 days of interest. In this scenario, you would need to bring in more cash to close than you would have if you closed on the 29th or 30th of September, just a few days earlier.

Of course the upside to the second scenario is, your first mortgage payment wouldn't be due until December 1st. You would simply need to bring in more money at the time of closing.

For more information on Closings or to find out how California Title can help you on your next transaction, please contact your Sales Representative or email californiatitle@caltitle.com.