Some of those, out in the world of real estate resale representation, are touting they can make it so you can go two two months, while living in your new home, without having to make your first payment.
In a perfect world, this maybe able to happen for everyone. However, in real estate, which is not perfect, due to so many cooks in the kitchen, rarely will you go two months without having to make your first mortgage payment when buying real estate.
In order to shine more light on how this works and how you can be educated as to the process, I have included a dissertation from our Top Real Estate Lender in the Santa Clarita Valley Cities. Mike Meena with Augusta Financial’s Dwayne will give us the intel from the Lender’s perspective.
Dwayne’s run down
(get a pencil and paper, it’s easier to grasp…)
First payment is due the 1st of the month following the first complete month in the house. So if you closing on the 15th of July, you will NOT have an August payment since you are only in the property a partial month, the first payment would be due September 1st in this case. You would not have to make that payment until September 15th before it is late so you can go about 60 days before your first payment is due.
Mortgage payments are made in arrears so the interest for July is the August payment and in the interest for August is the September payment. So at closing in the above example on the 15th, part of the closing costs will include the interest for July 15th to the 31st (15 days interest). That is collected as part of the closing cost. If you closing on the 25th, they would collect 6 days interest and if you closing on the 10th, they will collect 21 days interest.
This is how that one realtor in the area use to tell people that they would not have a mortgage payment for 2 months. You would need to set up closing between the 10th and 15th to make that happen.
I hope this is helpful.
Very Helpful Dwayne – Thank you.
The question now is how can we get a transaction to close between the 10th and the 15th of the month?
Very carefully, however a real estate transaction depends on way too many vendors to make it a 100% guaranteed closing time frame.
Most escrows are between 45 days and 60 days. This will include transactions which are conventional lending, those who are going to use FHA Financing, Those veterans of the world who are going to use a VA Loan, and also those conventional borrowers who are going less than 20% down.
With the new TRID laws, borrowers are now given three business days to review changes within the loan they are obtaining. If there are two changes – that equals a 6 day extension.
Again, you would have better odds threading a needle with a camel 🙂
Having said that, we try and hit the mark when possible. We also inform all parties of our intention.
Have an awesome day and please let me, Connor T. MacIvor know when you are ready for my assistance with anything that is real estate.