Do you remember When... - Posted by Tony in MI

Posted by Brad (CA) on March 16, 2002 at 11:35:35:

escrow or closing is typically 30-45 days where I am. And then depending on when you close within a month, could be as little as 29 days, if you close on January 31, to as long as 62 days after close, til you have to make your first payment.

you actually make a prorated payment at the close and then you skip the following month and start paying in arrears.

for a traditional buy:
Example: If you close on March 15, then you pay prorated interest from March 15 through March 31st (all part of closing costs). Then April’s payment is usually due on May 1st.

Does that make sense? Hope that helps

Do you remember When… - Posted by Tony in MI

Posted by Tony in MI on March 16, 2002 at 10:12:49:

you were first starting out? That’s me. I have been to this site almost everyday for 3 months now. My question is about timetables. If I were to get a house under contract and not able to flip or rent; about how long before first payment would be due on motrgage under normal purchase. Not using sub2 or lease opt. I am figuring from time of signing to first payment would be 4 months. 30-60 days til close and 2 months after close for first required payment to bank. Does this sound right? Are there methods of postponing payments with jeopardizing integrity? My plan of attack is to flip/wholesale to accrue capital but am unsure of timetable I have to work with.

Thanks to anyone who can remember that far back and replies.

Love this Site!

Tony in MI

Re: Do you remember When… - Posted by Craig (IL)

Posted by Craig (IL) on March 16, 2002 at 11:56:31:

I’m not sure why you are asking this question. If you’re buying conventionally you will have cash outlays even before closing. Lenders require paying up front for credit check and appraisals. And at closing you will have various closing costs.

Freqeuntly, it’s possible to delay the first payement for a bit, but only if you pay interest for the interim period upfront, in such case you pay interest before it is even accumulated. For example, if a closing is, say, on the 16th of January with a loan of 100K @ 7%. You may be able arrange to pay an amount equivilent to the interest that will accumulate on the full loan amount up intil your first payment March 1st. (In this example, in additon to all other closing costs, you’d pay an additional $786.31 up front --41/365ts of the annual rate over the full loan amount.)

Many people do this for a cash flow advantage. Also, it’s sometimes possible to role this cost into the principle. Note that this increases the loan amount and, hence, increases greatly the total cost over the life of the loan.

If, instead, using the above example, you made a payment on February 1st, you would start decreasing principle in two weeks, reducing total interest payements which over the life of the loan, which will be a lot of money.