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
Points paid by a lender for a loan with a rate above the rate on a zero point loan. For example, a lender might quote the following prices: 8%/0 points, 7.5%/3 points, 8.75%/-2.5 points. ...
A mortgage lender or mortgage broker. ...
Limit on the size of payment change on an adjustable rate mortgage. ...
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 ...
A reduction in the mortgage payment made by a homebuyer in the early years of the loan in exchange for an upfront cash deposit provided by the buyer, the seller, or both. How Temporary ...
An upfront cash payment required by the lender as part of the charge for the loan, expressed as a percent of the loan amount; e.g., '3 points' means a charge equal to 3% of the loan ...
An agreement between a mortgage borrower in distress and the lender that allows the borrower to sell the house and remit the proceeds to the lender. A short sale is an alternative to ...
The house in which the borrower will live most of the time, as distinct from a second home or an investor property that will be rented. ...
An independent contractor who offers the loan products of multiple lenders, called wholesalers. Mortgage brokers do not lend. They counsel borrowers on any problems involved in qualifying ...
Have a question or comment?
We're here to help.