If you’re like most first-time buyers, you’re worried about bringing enough money to the table at closing. Between your down payment, lender fees, and title charges, the numbers add up quickly. But there’s one hidden factor that can swing your cash-to-close by hundreds or even thousands of dollars: your closing date.

That’s because of something called short interest — the mortgage interest you owe for the days you’ve borrowed the lender’s money before your first full mortgage payment begins.

Mortgage Interest is Paid in Arrears

Unlike rent, which you pay upfront, mortgage interest is paid one month behind. If you make your payment on July 1st, you’re not paying for July — you’re paying for June.

So what happens when you close mid-month? You’ve borrowed the money and owned the home, but your first official mortgage payment won’t be due until the following month. The lender still needs to be paid for those partial days, so they collect it at closing as short interest.

Example: $400,000 Loan at 7%

• Monthly interest = about $2,333
• Daily interest ≈ $77

Let’s compare three different closing dates in July:

That’s a swing of nearly $2,000, depending on when in the month you close.

The “End of Month” Strategy

If you’re tight on cash, try to schedule your closing near the end of the month. That way, you’ll only owe a few days of short interest at closing. Yes, your first mortgage payment will come up a little quicker, but you’ll still get a month’s breathing room.

Here’s how it plays out:

• Close July 27 → First payment due Sept 1 (covering August). At closing, you only owe about $385 in short interest.
• Close July 2 → First payment still due Sept 1, but you owe almost $2,300 in short interest at closing.

Same first payment date, but wildly different cash-to-close.

Watch Out for Delays

This strategy works best if your closing happens on time. If you’re aiming for July 27 but the deal slips to August 2, the math changes:

• Now your first mortgage payment isn’t due until October 1 (covering September).
• That sounds great — two months “off” before your first payment.
• But at closing, you’ll owe almost a full month of August interest upfront. That’s about $2,300 — almost the same as if you had closed on July 2.

House Karma Tip

If cash is tight, push for a closing date in the last week of the month. Just make sure everyone (lender, escrow, seller) is aligned so there aren’t delays that bump you into the next month — which could wipe out your savings.

Bottom line: Your closing date doesn’t just affect your move-in schedule — it can change how much money you need at the table by thousands. Be smart, plan ahead, and use short interest to your advantage.