Comments on: Does closing a loan on a certain day of the month save you money? http://www.livelearninvest.com/does-closing-a-loan-on-a-certain-day-of-the-month-save-you-money/ Living life to its fullest by generating passive income through investments Thu, 02 Feb 2012 03:11:13 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Quickbeam http://www.livelearninvest.com/does-closing-a-loan-on-a-certain-day-of-the-month-save-you-money/comment-page-1/#comment-2908 Quickbeam Sun, 08 Apr 2007 02:34:26 +0000 http://www.livelearninvest.com/2007/04/06/does-closing-a-loan-on-a-certain-day-of-the-month-save-you-money/#comment-2908 One thing I always watch when buying a property or selling a property is making sure I don't buy right before the taxes are due or sell right after the taxes are due. This manily works when buying a home as you can time it better. One thing I always watch when buying a property or selling a property is making sure I don’t buy right before the taxes are due or sell right after the taxes are due.

This manily works when buying a home as you can time it better.

]]> By: limeade http://www.livelearninvest.com/does-closing-a-loan-on-a-certain-day-of-the-month-save-you-money/comment-page-1/#comment-2894 limeade Sat, 07 Apr 2007 05:35:48 +0000 http://www.livelearninvest.com/2007/04/06/does-closing-a-loan-on-a-certain-day-of-the-month-save-you-money/#comment-2894 It works to your advantage when it's an investment property because someone else is making your payment. If you close early in the month, you pay more prepaid interest, but the seller has to give you the rent for that month as well. Since the rent is more than all your expenses (why else would you buy it) you get an extra month of positive cash flow. Plus, if you close on, say, the third, you get the entire months rent but don't have to pay 3 days worth of interest. The big difference is who is paying for the property. If it's a good investment, the tenant is paying for it. So who cares that the prepaid interest is more, the tenant should be more than covering it. Does this make sense? -limeade It works to your advantage when it’s an investment property because someone else is making your payment. If you close early in the month, you pay more prepaid interest, but the seller has to give you the rent for that month as well. Since the rent is more than all your expenses (why else would you buy it) you get an extra month of positive cash flow. Plus, if you close on, say, the third, you get the entire months rent but don’t have to pay 3 days worth of interest.

The big difference is who is paying for the property. If it’s a good investment, the tenant is paying for it. So who cares that the prepaid interest is more, the tenant should be more than covering it.

Does this make sense?

-limeade

]]> By: Kenric http://www.livelearninvest.com/does-closing-a-loan-on-a-certain-day-of-the-month-save-you-money/comment-page-1/#comment-2887 Kenric Fri, 06 Apr 2007 21:54:43 +0000 http://www.livelearninvest.com/2007/04/06/does-closing-a-loan-on-a-certain-day-of-the-month-save-you-money/#comment-2887 Andres brought up a good point about closing costs. In cases where you get the seller to agree to pay for all closing costs or up to a certain amount. Its beneficial for you to get as much prepaid interest into the closing costs as possible. For example, if the seller is paying up to $5,000 in closing costs and your closing costs are only $4,500. Why not move the closing so that the prepaid interest equals $500? Andres brought up a good point about closing costs. In cases where you get the seller to agree to pay for all closing costs or up to a certain amount. Its beneficial for you to get as much prepaid interest into the closing costs as possible.

For example, if the seller is paying up to $5,000 in closing costs and your closing costs are only $4,500. Why not move the closing so that the prepaid interest equals $500?

]]> By: Kenric http://www.livelearninvest.com/does-closing-a-loan-on-a-certain-day-of-the-month-save-you-money/comment-page-1/#comment-2886 Kenric Fri, 06 Apr 2007 21:52:49 +0000 http://www.livelearninvest.com/2007/04/06/does-closing-a-loan-on-a-certain-day-of-the-month-save-you-money/#comment-2886 Limeade, I agree with you to some extent about investment properties. The same applies in an investment property, you pay interest from the day you close. However, if you're coming from a 1031 exchange, you can use the proceeds for prepaid interest thus reducing your out of pocket expenses. If you're paying closing costs out of pocket, I don't see how this would work to your advantage because its an investment property. Limeade, I agree with you to some extent about investment properties.

The same applies in an investment property, you pay interest from the day you close. However, if you’re coming from a 1031 exchange, you can use the proceeds for prepaid interest thus reducing your out of pocket expenses.

If you’re paying closing costs out of pocket, I don’t see how this would work to your advantage because its an investment property.

]]> By: limeade http://www.livelearninvest.com/does-closing-a-loan-on-a-certain-day-of-the-month-save-you-money/comment-page-1/#comment-2885 limeade Fri, 06 Apr 2007 21:34:18 +0000 http://www.livelearninvest.com/2007/04/06/does-closing-a-loan-on-a-certain-day-of-the-month-save-you-money/#comment-2885 I agree that the date doesn't matter when you're closing on your own house. It can matter, however, when you're working with an investment property. In this sense, it's all about cash flow and not total outlay. Depending on when you close on an investment deal, it affects how much of the existing tenants rents are prorated to you and also when your first payment is due. Therefore you can essentially collect 2 months worth of rent before your first payment is due. So, it can matter, but not really if you're just buying your own home. Good topic to bring up though. -limeade I agree that the date doesn’t matter when you’re closing on your own house.

It can matter, however, when you’re working with an investment property. In this sense, it’s all about cash flow and not total outlay.

Depending on when you close on an investment deal, it affects how much of the existing tenants rents are prorated to you and also when your first payment is due. Therefore you can essentially collect 2 months worth of rent before your first payment is due.

So, it can matter, but not really if you’re just buying your own home. Good topic to bring up though.

-limeade

]]> By: Andres http://www.livelearninvest.com/does-closing-a-loan-on-a-certain-day-of-the-month-save-you-money/comment-page-1/#comment-2871 Andres Fri, 06 Apr 2007 13:08:58 +0000 http://www.livelearninvest.com/2007/04/06/does-closing-a-loan-on-a-certain-day-of-the-month-save-you-money/#comment-2871 I think the misconception in this issue is highly related to a lot of people getting loans that included the closing costs, so for them it does seem like "savings". But you are right, you are paying for that, either now or later, you will pay for that. In one closing I did we had planned to close say Wednesday so the payoff amount was calculated for that day, but we actually ended up closing two days later. I got a "bill" later for like 3 dollars to cover for the interest for those extra days. Banks WILL NOT give you anything for free, not even a couple of cents. I think the misconception in this issue is highly related to a lot of people getting loans that included the closing costs, so for them it does seem like “savings”. But you are right, you are paying for that, either now or later, you will pay for that. In one closing I did we had planned to close say Wednesday so the payoff amount was calculated for that day, but we actually ended up closing two days later. I got a “bill” later for like 3 dollars to cover for the interest for those extra days. Banks WILL NOT give you anything for free, not even a couple of cents.

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