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Waiting in Line at the Settlement Office

Closing DocumentsIt never seems to fail.  The end of the month is packed with closings.  The loan officers are scrambling, the settlement companies are swamped and the Realtors® are shuffling contracts to make sure everything is done.  But is closing at the end of the month all that important?

The answer may depend more on your cash in hand than any other reason.  For many first time homebuyers an end of the month closing means less money needed at the closing table.  First you probably made your last rent payment at the beginning of the month and if you close and move at the end of the month you don't have to worry about another rent payment.  Secondly interest on your mortgage begins on the day the transaction closes.  So if you close on March 30th then you only have to pre-pay interest for that month or in this case one day.  Your first payment will be due on May 1st,   when you will be paying April's interest.  Interest is always paid in arrears so in some ways April becomes a "free" month.

There is no harm in closing in the middle of the month and some settlement companies in Northern Virginia offer specials to encourage buyers to choose a settlement date other than the last few days of the month.   If you decide to close in the middle of the month you just need to have extra funds at closing to cover the pre-paid interest that will be due on your loan.  The good news is if you are buying a home at the end of the year and close in the middle of November you won't have a payment due until the 1st of January.

I generally encourage my first time homebuyers to look at the end of the month to close so they have a little extra money in hand for the incidentals.  For my move up buyers with cash from a previous sale I suggest they take advantage of the less frenetic middle of the month closing.  It is interesting to point out to buyers that no matter when you close you don't actually save any money in the long run.  Your final mortgage payment is still a long way out and it will due 15, 30 or 40 years to the day of your original close.

So it is the end of the month and I'm off to the settlement office!

                                   Real People*Real Lives*Real Estate

If you are interested in learning more about the Northern Virginia Real Estate market including Alexandria, Arlington, Fairfax and Prince William Counties give Cindy Jones and Integrity Real Estate Group a call at 703-346-2213.

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Comment balloon 3 commentsCindy Jones • July 30 2007 02:57PM

Comments

It's kind of like the old saying, "If it weren't for the last minute, I wouldn't get anything done!"

One other consideration, most often tenancies are written with rent due on the first of the month.  Which means that the first day of occupancy would be on the first of the month.

Posted by Bob Marsh, Broker,480-529-2936, Warm Weather Real Estate (Warm Weather Real Estate) about 11 years ago
I swear!  Some title compaies are worse than airlines over Christmas when it comes to overbooking settlements.  I think a lot of people are willing to settle after the first when they realize it isn't really going to save them money - that they will have an extra month without a mortage payment.
Posted by Patricia Kennedy, Home in the Capital (RLAH Real Estate) about 11 years ago

Pat-I have learned if I am scheduling at then end of the month to try and grab the first or second time slot of the day.  Usually can avoid the domino effect of problems and delays.  Had 3 settlements in the last few days and all went smoothly with the 10 am time slots.

Posted by Cindy Jones, Pentagon, Fort Belvoir & Quantico Real Estate News (Integrity Real Estate Group) about 11 years ago

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