This is what makes closing near the end of the month so appealing to homebuyers. You owe less up front. In many cases, homebuyers are really strapped for cash and they are counting every penny right around closing. Whereas, other homebuyers aren t so sensitive to that one-time interim interest payment, and instead love the fact that their first mortgage payment isn t due for well over a month. If you are one of these people, then closing just after the month begins is right for you.
Interim interest can play a major role when it comes to refinancing a home as well.
Many times a homeowner will calculate the amount needed on a refinance based upon their current mortgage balance plus costs involved. The one calculation we see borrowers miss time and again is the accrual of interim interest on the old mortgage. Many times a borrower will call their current mortgage holder at the beginning of a month to find out the amount of their current principal balance. If they wind up closing on their refinance at the end of the month, they may be shocked to learn the amount needed to pay off the old mortgage is much greater than the original quote. What s more, many individuals who are refinancing won t make the mortgage payment that is due just prior to closing on a refinance.