Patience Pays Off
While going through the home buying process, the word patience for most may be a sore subject. Between the pre-approval process, the home search and offer, it can become a stressful time. Not to mention if you get caught in a bidding war or the home you want has issues after inspection. The laundry list of things goes on and just when you thought you had enough…we are asking you to pack on even more patience? Yes!
Pack your patience… and then pack some more!
Ways To Save
With such a large investment and risk, hopefully you are working with a great team that is advising you and leading you in the right direction throughout the home buying process. Just in-case you didn’t know, interest starts accruing the day you close and won’t end until the loan is paid off.
So what are some ways I can save?
Push It Back
Pushing your closing date to later in the month can help you cut down costs. Although this doesn’t mean anything towards savings through the life of the loan, it does help at the initial time, which we will break down later in this post.
If you are moving into a community with HOA fees associated, paying near the end of the month can reduce the amount of upfront cost there are due to the cost usually being prorated.
Interest, again is accruing and if you close early on in the month, you will be paying that accruing interest from the closing date until month end.
Ways You Benefit
We will set the scene for you. You are about to purchase a home where the purchase price is $300,000. You are set to close on June 15 and are ready to go!
Saving on interest may seem insignificant but look at the numbers:
Daily Interest ($3,000 x 5%) 1/365 =$41.10/day
Closing date June 15, prepay 15 days interest (15 x $41.10= $616.50)
If you would close on June 29, prepay 2 days of interest (2x $41.10 = $82.20)
So What Did This Save?
A savings of about $535 just by changing the closing date. This is more of a cash flow preference than actual true savings.
How about HOA?
HOA Fees/day ($300/30) = $10/day
Closing June 15, you will be paying $150 ($10 x 15 = $150)
Closing June 29, you will be paying $20 ($10 x 2 = $20)
My New Mortgage Payment
With all of this in mind, you are probably also thinking about when your first mortgage payment will be due. Your mortgage is paid in arrears. If you had been paying as a tenant, you were paying in advanced, for the upcoming month. Whereas your mortgage payment is made toward the end of the month.
The home you closed on at the end of June in order to save money, means your first payment wouldn’t be due until the end of August.
Although these ideas may save you money at the beginning, it is very important to know financially what is going to be right for you. Whether you are leaving a rental property, or selling a previous home, talk with your trusted lenders about the options you may have and how each one will play out. As a buyer, remember that you do have the power to negotiate and make sure everything pans out in a way that will set you or your family up for success.
A Note From The Author: The opinions you read here come from our editorial team. Our content is accurate to the best of our knowledge when we initially post it.
Article by Breana Washington
Do you have questions about your credit report? If you would like to speak with one of our attorneys or credit advisors and go through a free consultation please give us a call at 1-800-994-3070 we would be happy to help.
Check out Credit Law Center’s info-graphic on 4 myths of collections reporting on credit reports.