Advantages On Closing Early

by Fabio Zocante on April 11, 2012

Most people schedule real-estate settlements delayed in the month to save on paying upfront cash, but the last-minute rush frequently leads to errors and creates logjams.

To milk all them out of their last rent checks, first-time buyers frequently try to schedule their closings as close to the end of the month as they can. But there is one more motive almost all buyers, not just rookies, prefer to settle up late in the month — interest. The later you close, the less interest that is payable to the lender. And that means less cash you will need to bring to the table.

Finance interest is collected in arrears. As a result, if the finance begins on the first of the month after the final date, borrowers are required to pay at closing all the interest due from the settlement date until the end of the month. The fewer days left in the month, the less upfront interest that is unpaid at settlement. See what our professionals has to say at

But if a few hundred dollars extra won’t put a dent in your financial plan, there are several good reasons to consider closing earlier. One is that fewer mistakes are made when closing agents aren’t rushed because they are trying to accommodate everyone they can. Another is that you’ll get superior service. And it is not just escrow organizations that are under the gun at the end of the month. It is everyone down the line — appraisers, surveyors, insurance agents, even lenders.

If the mortgage is insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs, you can usually get a credit if you close by the 7th of the month. If yours is a conventional mortgage, a credit is typically available if you settle by the tenth.

A full transaction so soon after ponying up thousands of dollars at closing, not to cite covering moving costs and utility company deposits, could present such a serious hardship that concluding later in the month — and postponing that first payment for as long as possible — might be a better course of action.

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