Closing Date
Definition of "Closing Date"
The date on which the closing occurs. On a purchase transaction, there is no financial advantage to the buyer/borrower in closing on any day of the month, as compared to any other day. Buyers should select the closing date as close as possible to the moving date, regardless of the day of the month that is. The interest clock on the loan starts ticking on the closing date, because the lender expects to be paid beginning the day the funds are disbursed. There is no point in paying interest before you are prepared to move. While borrowers pay interest beginning the closing date, they may pay it in different ways, depending on when during the month they close. The first payment on a home loan is due on the first day of a month and includes interest for a full month. Since loans may close anytime within the month, there is always an interest adjustment at closing based on the exact closing date. This is Per Diem Interest or 'prepaid interest.' Closing on different days during the month will shift the amount of interest you pay at closing, but will not affect the total interest you pay beginning at closing.
Popular Mortgage Terms
The method of financing used when a borrower contracts to have a house built, as opposed to purchasing a completed house. Construction can be financed in two ways. One way is to use two ...
A lender who delivers loans to another (usually larger) lender against prior price commitments the larger lender has made to the correspondent. Mortgage brokers sometimes evolve into ...
The period you must retain a mortgage in order for it to be profitable to pay points to reduce the rate. ...
Housing expense plus current debt service payments. ...
Protection for a borrower against the danger that rates will rise between the time the borrower applies for a loan and the time the loan closes. Rate protection can take the form of a ...
Prices that assume a more or less standardized set of transaction characteristics that generally command the lowest prices. Generic prices are distinguished from transaction specific ...
Adjustable rate mortgages on which the interest rate is mechanically determined based on the value of an interest rate index. Indexed ARMs are distinguished from Discretionary ARMs, in that ...
A mortgage that does not meet the purchase requirements of the two federal agencies, Fannie Mae and Freddie Mac, because it is too large or for other reasons, such as poor credit or ...
The policy of a second mortgage lender toward allowing a borrower to refinance the first mortgage while leaving the second in place. ...
Have a question or comment?
We're here to help.