What day and month is best to close?

boyfly · Joined: 08 Nov 2007 Posts: 10 Location: Kansas

I don't fully understand all the "in's and out's" of a mortgage process, but in general I am curious if there is a certain day of the month and/or certain month of the year that is the most financially strategic to close on a home.

For example, can you time the closing so that the mortgage billing cycle allows you not to make your first payment for 2 months?

And what about the tax benefit of buying a home? If you're close to the end of a year and are about to close, should you force it to be in December or wait until January?

Those are two things I've been wondering about, but I'd like to hear any other ideas, too.

m2c · Joined: 03 Aug 2005 Posts: 937

Clock starts ticking when the funds are disbursed (except in CA – mortgage broker “joke”) so the “delaying your first payment” bit is just a sales pitch. Close on the first of the month and your next payment is not “for 2 months” but, of course, you’ve paid a lot of interim interest at closing and that type of interest is prepaid, not in arrears.

Your second question MIGHT be more real and is relative to your own usage of deductible items relative to the standard deduction for federal income taxes. It is possible if you live in a low tax state and close towards the end of the year, you might not have any “tax advantage” from mortgage interest, MI, etc. because it does not exceed your standard deduction. Don’t think it’s worth losing sleep over.

boyfly · Joined: 08 Nov 2007 Posts: 10 Location: Kansas

We are in a situation where the wife found what she wants before we had saved up as much as we wanted... so if we push everything forward quickly and close before the end of the year we won't have as much cash as we would if we delayed a bit. If the sellers agree to pay all closing costs, prepaids, and reserves (they have verbally), we only have to come up with the downpayment now, and the amount of furniture/appliances we can buy will depend on how soon we start paying the mortgage.

I know it's not the best situation, but there are times when a little sacrifice (aka financial squeeze) to keep the lady happy is ok.

m2c · Joined: 03 Aug 2005 Posts: 937

I’m not an advocate of “buy before your time” – stretching your liquid asset position but at least I “understand” and there COULD be more pressing issues about to come into play assuming you’re going with a conventional loan with less than a 30% downpayment. If your representative FICO score is less than 680, you could see “hits” (additional points or higher rate – mix or match) ranging any where from ¾ to 2 discount points. Ouch! This will kick in soon – probably with applications taken in December.

Remember there are a lot of other expenses moving into your first home but if you’re bound and determined, you might want to move quickly. I assume you’ve checked for any first-time homebuyer programs in your state. Also grants from the flubs may be available on an income-cap basis but not until February or March (not sure if you’re region has this particular program but they MUST give away part of their profits).

Good luck and be sure to monitor your cash position so don't resort to credit cards which can easily get out of hand.

chow · Posted: Fri Nov 09, 2007 10:47 am Post subject:

To check to see if there are funds in your state/area, go here.... :wink:

http://www.hud.gov/local/ks/homeownership/buyingprgms.cfm

Nasika · Joined: 13 Nov 2007 Posts: 5

Is there a season for mortgage loans?

I mean like we buy warm clothes for winter is there a period of the year when there is a boom of loans?

chow · Posted: Thu Nov 15, 2007 10:38 am Post subject:

Not right now! :cry:

mylekiller · Joined: 27 Oct 2007 Posts: 3

Nasika wrote: Is there a season for mortgage loans?

I mean like we buy warm clothes for winter is there a period of the year when there is a boom of loans?

The only 'season' correlates with the purchase season of homebuyers and historically that has revolved around summer (kids out of school). I couldn't say that there is a 'season' for refi's or home equity loans.

That summer season isn't just 3 months though. Seems to start around Spring Break and carry into Sept. I have noticed my down months tend to be Feb, Oct, Nov. Any other time I'm swamped and can't tell a difference. Dec has always been good for business because both builders and buyers are interested in year-end tax implications.

lucybethany · Joined: 01 Sep 2008 Posts: 3

It is best to finish within 3 months.

:twisted: :P

Jenie0109 · Joined: 27 Jan 2009 Posts: 307 Location: chicago IL

thanks for the info...nice post