Mortgage Advice

Choosing a Closing Date: 5 Things to Consider

August 8, 2014

Closing day—it’s the day you’ve been waiting for since you started searching for your dream home. Now that you’ve found “the one,” it’s time to get serious about sealing the deal. The big day will be here before you know it, and there’s no such thing as being too prepared. We even put together a step-by-step guide that will walk you through the closing process to help you prepare for the big day.

Before you pencil in your closing date and circle it in permanent marker, you’ll want to put some thought into which date you choose. Here are five things to consider:

  1. Scheduling a closing date. It’s important to remember that the projected closing date listed on your purchase agreement is a target date, not the actual day you will close on your home. Once you receive the “clear to close,” you can work with your loan officer and real estate agent to schedule your official closing date.
  2. What type of loan are you getting? Some loan programs, such as FHA 203(k) loans,VA loans, USDA Rural Development loans and MSHDA programs, have specific requirements that could potentially extend the closing process. Before you set your heart on a specific closing date, consult with your loan officer about what special requirements your loan program has and how long the closing process should take.
  3.  Closing at the end of the month. While there are benefits to choosing a closing date at the end of the month, such as paying less prepaid interest, this is usually a busy time of the month for all parties involved in the transaction. Behind the scenes, your mortgage lender, real estate agent and title company are working hard to make sure every aspect of your loan comes together like clockwork. Rather than trying to speed up the process and close before the end of the month, it would be wise to close your loan during a period of the month with less activity. This gives all parties involved enough time to complete the final paperwork, review it for any inaccuracies and account for any unforeseen events that could extend the closing process. This will ensure your closing experience is smooth and successful, rather than nerve-wracking and rushed.
  4. Closing at the beginning of the month. Although you will pay more money in prepaid interest if you close toward the beginning of the month, you will give yourself more time to pay your first mortgage payment. For example, if you close your loan on September 4, your first mortgage payment won’t be due until November 1. If you closed on August 30, your mortgage payment would be due one month earlier on October 1.
  5. When do you plan on moving in? If your goal is to avoid paying extra fees in pre-paid interest on closing day, you may want to consider choosing a closing date that is closer to your expected move-in date.

When it comes to choosing a closing date, there are many factors that need to be considered. Ideally, you want to find a closing date that suits your needs and works for all parties involved. Remember, the key to closing on time is preparing ahead of time.