When is the Best Time to Close on a New Home?

When should you close?

Your closing date can save (or cost) you hundreds. Here's what to know.

The short answer: If you’re tight on cash, close late in the month. If you want fewer headaches and better service, close early. Both come with tradeoffs.

Why timing matters

Mortgage interest is paid in arrears. At closing, you pay "prepaid interest" from your closing date to the end of that month. About 95 percent of all real estate closings, “take place during the last week of the month,” says Joe Drum, a senior vice president at the Financial National Title Group in Santa Barbara.

• Late closings = lower upfront costs.

  • Fewer days left in the month means fewer interest days to cover.

  • “Everybody’s scrambling at the end of the month,” says one Florida agent.

  • Bottlenecks from lenders to surveyors can cause last-minute delays.

• Early closings = better experience.

  • Less pressure on closing agents, lenders, and everyone else involved.

  • Closing mid-month often means fewer errors, less waiting, and better service.

Why it matters: A rushed closing can lead to costly mistakes and major stress.

Smart cash move

A buyer closing May 30 pays just two days of interest upfront (May 30–31). Close on May 15, and you’ll owe interest for 16 days. That difference can be $400 or more depending on your loan size and rate.

Why it matters: Saving cash at closing can free up funds for moving costs, furniture, or an emergency buffer.

But there’s a catch: If you close late, your first full mortgage payment is due sooner.

• Close Jan. 28 → First payment: March 1

• Close Jan. 6 (with interest credit) → First payment: Feb. 1

So while you save upfront, that reprieve is short-lived.

How interest rate trends affect closing costs

In a rising rate environment, locking in your rate and closing sooner could protect you from increases. In a falling market, delaying might score a better rate – if your builder or lender allows flexibility.

Interest credits can help – if you ask.

Some lenders offer an interest credit if you close early in the month:

• FHA/VA loans: Credit if you close by the 7th

• Conventional loans: Usually by the 10th

You'll pay less at closing, but your first full mortgage payment hits sooner.

Buyer’s tip: Don’t expect an interest credit automatically – ask for it upfront.

More than just interest

Your closing date also affects what you owe in:

• Property taxes: Typically 14 months’ worth collected at closing

• Homeowners insurance: Usually two months collected upfront

Best month to close on a new construction home

There’s no perfect month, but timing your closing toward the end of the month can help reduce prepaid interest – a plus if you’re also paying deposits, moving costs, or furnishing your home.

• What about tax breaks? If you close before December 31, you may be able to deduct mortgage interest and property taxes paid at closing on your tax return – a potential benefit if you're itemizing.

• In a buyer’s market: Builders may offer closing cost incentives at any time of year, but especially toward quarter- or year-end to meet sales goals. Ask about seasonal discounts or lender credits.

Bottom line

If cash is tight, close as late in the month as possible. If you want better service and fewer errors, close mid-month. Either way, ask your lender about interest credits and know when your first full payment is due.