Will Closing at the End of the Month Save You Money?
Will closing at the end of the month save you money?
This myth is NOT true!!!
That is because interest is paid in arrears, meaning you use the money first and then you pay the interest. That's very different than renting, where you pay at the beginning of the month for the month that will follow.
People try to close at the end of the month because they will pay for fewer days of interest at closing. For example, if you were to close the end of March instead of the beginning of April here is what would happen…you would pay for just the few days of interest to finish the month of March at closing. But then your first regular mortgage payment would be due about 30 days later on May 1st for the month of April.
What would happen if you missed closing at the end of March and instead closed April 1st? You would have to pay a full month of interest to finish off April, but then your first regular payment would be about 60 days later on June 1st for the month of May.
As you can see, there really is no difference, aside from timing. You wind up paying roughly the same amount by June 1st. So, no need to worry if your scheduled closing goes from the end of one month to the beginning of the next.