pros / cons to closing on the 1st versus the 31

I vaguely remember that if you close on one, you don't pay accrued interest, but your mortgage payment is sooner, whereas if you chose the other, you would have to pay accrued interest at closing, but you'd have longer until your first mortgage payment...

Given the option, which would you choose and why?

Thanks!

Re: pros / cons to closing on the 1st versus the 31

We closed on May 9th and our first mortgage pymt wasn't due until July 1st. The interest was rolled into the closing costs, and we had money set aside for that, so IMO, it was nice not to have to make a payment for almost 2 months.

Re: pros / cons to closing on the 1st versus the 31

It's 6 of one half a dozen of the other. If you don't close on the first of the month, then you will pay stub interest for remainder of the month at the closing table and your first payment will be the first of the following month after 30 days (i.e. you closed July 10th, your first payment is due Sept. 1, but you paid the interest from July 10th through the 31st at the closing table).
If you close on the first of the month, then you pay no stub interest at closing, but your first payment is due the first of the next month (i.e. you close August 1, your payment is due Sept. 1)

Re: pros / cons to closing on the 1st versus the 31

If you closed on july 31st you pay one days worth of interest and your first payment would be Sept 1. If you close on Aug 1st you pay no interest and your payment is still due Sept 1. If you closed on the 2nd of August you would pay the rest of August interest and your payment would be due Oct 1. This only applies to 1st mortgages though. If you are taking a HELOC or a Home Equity as your 2nd mortgage the 1st payment is usually due the month after you close with no interest due.


Given the option it really depends on your circumstances. We closed on April 5th and first payment was due June 1st. We did it this way because we rather come to the table with the money then pay our mortgage sooner--we wanted a little breathing room of no bills because we had had some things to do around the house and had the money in the bank that it didn't really matter to us. It is really a personal preference--in the end you are still paying the same money it is just a matter of when you are paying it.

Message edited 7/27/2007 10:11:30 AM.

Re: pros / cons to closing on the 1st versus the 31

Thank you all for explaining!

Re: pros / cons to closing on the 1st versus the 31

we closed on december 29 and our first payment was due feb 1. the extra 2 days were rolled into closing. i liked it that way - gave us a chance to breath.

Re: pros / cons to closing on the 1st versus the 31

We (as of right now) are closing on August 7th and our 1st payment will be on October 1st. I am not sure how much interest we will have to pay...