Here’s an idea that can help you reduce the amount of cash you need to reduce your closing costs.
How can I reduce my closing costs?
This applies if you’re purchasing a home and financing it with a mortgage. At the closing, you’ll be required to pay interest on the loan from whatever day you close until the 30th of the month. If you close on the 1st, you’ll pay the full interest for the month. If you close on the 25th, you’ll only pay 5 days worth of interest.
For example – on a 30 year mortgage amount of $200,000 with a 4% interest rate, your interest for a month is +- $955.00, or $31.83 per day. If you close on the 1st you’ll pay that $955.00 as a closing cost. If you were to close on the 25th, you’ll pay $159.15. As a result, you’ll need almost $800 less cash to close!
As a matter of fact, you’ll pay interest from the day you purchase the home until the day the mortgage is paid off. However, if cash is a little tight, this may help your reduce your closing costs.