Tuesday, September 9, 2014

Choosing the right closing date can save buyers money


Although every home buyer has a unique set of circumstances it is fair to say that most lenders require up to 45 days to approve a mortgage. Assuming that all is well it is important that the home buyer be involved in deciding what date the actual closing should take place. We’ve all heard the saying that “timing is everything” and it’s no different if one is buying a home. Choosing the right date can help to avoid spending additional cash before actually taking possession of the home and to prevent certain circumstances that could possibly delay the closing.

The first consideration of what day to close is obvious; it must be on a day and time that is convenient for all parties involved to be present. Regardless of your circumstances insisting on a date that is good for you but not so good for everyone else involved is almost guaranteed to be problematic. Here are 3 other points to consider if you are in the process of buying a home.

Reduce the Amount Needed at the Closing Table
If you find that coming up with the cash you need at closing might be a challenge there is one thing you can do to relieve some of the pressure. In a typical home purchase the buyer is required to pay advance interest on the home loan to cover the period from the closing date to the end of the month.  As an example, if you close on January 7th than you will need to pay the interest on your home loan covering the time period from the 7th to the 31st of that month. You can avoid needing this “up front” money by simply scheduling the closing as late in the month as possible such as the 30th or 31st if possible.

Keep in mind however that if there is a delay for some reason that you might find yourself in the same situation early in the next month. It’s best to talk to your realtor regarding this type of situation but it is one possible way to ensure that you will have the necessary funds at closing if money is a problem at this critical time.

Plan Ahead to Have the Time that You Need
Many times when the closing date is close to a holiday (such as Thanksgiving or Christmas) the buyer is anxious to get into the home before the holiday. This is completely understandable of course and if it works out than the new homeowner can even schedule the move into their new home using the existing holiday from work without missing additional time or using personal days off. The same strategy can be applied to weekends by closing on a Friday.

The problem here is obvious; if there’s a “snag” that causes a delay in the closing than your plans are down the drain. If you are trying to plan your closing close to a holiday or weekend than don’t plan it on the last possible business day such as the day before Thanksgiving or on a Friday for a weekend move. Give yourself a few days of “wiggle” room just in case. That way it is at least possible to resolve the problem in time. If you plan for the last moment and there is some sort of problem than there’s little chance of getting it resolved until after the holidays or weekend.

Make Your Move at the Right Time
There’s no sense in paying for a home that you are not living in. Don’t agree to a closing on the 3rd of the month if you can’t move in until the 17th. You’ll be paying half a month’s mortgage payment for a property that you’re not even using at the time. That can add up to a significant waste of money considering the fact that you are probably still paying to live elsewhere until you actually move.Choosing the right closing date is requires thought and is something that you should have planned well in advance.

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