Wednesday, April 10, 2019 / by Connie Tracy
Choosing the day or week of the month to close escrow on your house purchase can have significant advantages.
If you are the buyer, you might prefer to close toward the end of the month and avoid pre-paid interest on your new mortgage. (Interest on a mortgage is always paid in arrears). Sellers often prefer to close on the first of the month and receive their sales proceeds early on in order to accommodate their purchase of a replacement house or moving plans.
Both parties should consider if there is a possibility they might be out of town- or the country- when the closing date is selected. You will want to be sure you do not choose a day that falls on a weekend or holiday.
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Advantages to closing in the first two weeks of the month
** They tend to be less busy then the end of the month for both the lender and closing agent.
** Closing early in the month allows time to take care of any unforeseen problems that might delay the closing- such as inspection approvals, securing replacement housing for the seller, and down payment funds for the buyer.
Advantages to closing toward the end of the month
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** Buyers have less out of pocket expense because they will have to come up with a bit less interest on their mortgage and expenses. This can be a benefit in the short term by avoiding a large amount of money at a time when a buyer may need cash for other expenses- such as moving or remodeling work on their new house.
** Interest on a mortgage accrues from the date borrowers close through the end of that month. For example, if borrowers close on June 29, they will owe interest for June 29 and 30. IF the borrowers close earlier in the month, for example, June 14, they will owe interest from the 14th up to the last day of the month.
For some unknown reason, the 15th of the month tends to be the busiest day of the month for lenders and the day that causes the longest delay in getting closing documents prepared.
** When the closing happens near the end of the month, the first mortgage payment will be due one full month AFTER the last day of the month the mortgage closed. So, if you the borrower closes June 14 or June 29, the first mortgage payment will not be until Aug 1.
Why Friday is not the best day to close
Fridays are often the busiest day of the week for the closing agent. Try to schedule your closing for a Monday, Tuesday, or Wednesday to allow for last-minute complications and allow yourself time to clear up the problem ie: providing additional documentation required or funds you didn't anticipate.
Check out my website at https://connie.viewhomesinspokane.com for more helpful articles for buyers and sellers! The more you know, the more prepared you will be in this competitive market.
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