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When is the best time of the month to close?

By
Real Estate Broker/Owner with DROdio Real Estate, Inc

The answer to that is a little more involved than on might think.  The short answer is close towards the end of the month but not during the very last couple of days and avoid Monday and Friday settlements.  The long answer is as follows:

As you might already know, mortgage is paid in arrears, meaning unlike rent, you pay your first mortgage payment after you’ve lived in your home for that month.  The reason why this point is significant to the settlement question is because lenders like to start off the billing with your set monthly payments.  So they collect the pro-rated interest from the day you closes to the end of the month so if you close on Aug 20, they’ll collect interest from you (at settlement) for Aug 20 - Aug 31.  Then you will make your first mortgage payment in Oct 1st. However, if you close before the 5th of the month, some lenders will CREDIT you the money back to the beginning of the month and start collecting regular mortgage payments from you starting the following month.  So if you close on Aug 3, you will get a credit from the lender for Aug 1 - Aug 2 and then you will start your regular mortgage payment starting Sept 1.  This is true for most, but not all lenders.  So, depending on what day you close, the funds you will need to bring to settlement will change.

We like to advise our clients to avoid Monday and Friday settlements.  Mondays are not the best days  because the previous two days were not working business days for the banks so the chances of incomplete files are greater on Mondays.  Friday are generally much busier for settlement companies and if an issue were to arise, you will have to wait 3 days for it to be resolved on Monday.



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Comments (2)

Lisa Hill
Florida Property Experts - Daytona Beach, FL
Daytona Beach Real Estate

Do they actually listen? Mine ALWAYS want to close on Friday! But then I rarely have anything that delays the closing. The worst delay I ever had was during the New York blackout a few years ago. My client's wife was in New York and was supposed to sign and overnight mail her end of the paperwork. Unfortunately, the package was on route TO New York when everything went dark. The husband was freaking out because he couldn't reach his wife and the package never showed up. To make things worse, I had sold them a FSBO so there was no representation for the seller, who didn't want to let the buyer move in without his money. This is the day I came to fully appreciate my preferred closing agent. She got everyone to calm down and pulled it all together. To this day, I do my best to use that closing agent in all my closings!  Considering how long this comment is, I think I may post a blog about this =)

Lisa Hill

Aug 13, 2007 07:14 PM
Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional
Charles Rutenberg Realty - Clearwater, FL
Palm Harbor, Dunedin, Clearwater, Safety Harbor
I agree that Mondays are not the best closing days and if I have to do a Friday, I try to make it the first one of the day!!! 9am, just in case of problems!!!
Aug 14, 2007 03:36 AM