The answer to this question used to be pretty standard: Schedule your closing for the end of the month!
Why? Mostly because scheduling your settlement for the end of the month means you’ll pay less in closing costs. You’ll have to pay interest on the mortgage from the date you close until the end of the month. So, if you close on July 29, you have to pay interest for July 29 through 31. If you close on July 15, you have to pay interest for July 15 through 31.
But conventional wisdom is changing – or at least becoming more flexible. If you want to pay less at closing, scheduling your settlement for the end of the month is still a good idea. But there are two reasons you may want to consider closing earlier in the month.
Your first mortgage payment will be due a month after the last day of the month in which you closed. If you close on July 29, your first mortgage payment will be due in September.
On the flip side, consider this: If you close on July 15, your first mortgage payment will still be due in September. You’ll have to pay more up front in closing costs, but you’ll have longer until that first mortgage payment is due.
Most clients opt to close at the end of the month, and that means lenders, agents, and title companies are slammed during these periods preparing for their closings. Closing earlier in the month means everyone involved in the process might feel a little less harried.