Choosing the right closing date can help save you money while reducing the chances of a mistake being made that could end up either delaying or cancelling the deal. Purchasing a home is one of the biggest purchases anyone can make, and it all starts with the closing. The majority of lenders will require up to 45 days to approve financing; but once that has been taken care of, it is important that buyers work with their lender and the agents involved in the sale to choose a closing date that is beneficial for everyone involved.
Many homeowners are not aware that they have the ability to choose their closing date. This can be beneficial for buyers who may need some extra time to pack up their old home or for any other reason that may have come up. Below are three common reasons that buyers should keep in mind when selecting a closing date.
- Cash Flow – Purchasing a home is an expensive process, if cash flow becomes an issue during it is recommended that you choose a closing date towards the end of the month. This will lower the amount of prepaid interest that you will be responsible for paying. Prepaid interest is used to cover the period of time between the closing date and the end of that month. To avoid having to pay a large amount of prepaid interest, choosing a closing date closer to the end of the month can be rather beneficial.
- Be Prepared – When choosing a closing date you should choose one that is at scheduled around the time you are prepared to take possession of your new home. Taking possession of your new home can mean one of two things; you are either prepared to move in and get settled or you are now ready to begin renovating the property. In either case you should a date that will allow you ample time to prepare for either moving in or beginning work on your new home.
- Avoid The Rush – Many homebuyers tend to schedule closing dates near the holidays in order to use that free time to move. The reasoning behind this decision is sound, but you may not be the only one who is thinking in this way. Many other homebuyers may have the same idea, which can lead to mortgage lenders becoming bogged down with closings. It also means that there is a greater chance of a mistake occurring when your paperwork is filed. This is a great way to utilize your vacation time, but just prepared for any delays that may occur.
Purchasing a home is one of the biggest investments you can make during your life. Take the time to properly understand what is involved in the process and how acting at certain times throughout the deal can be beneficial for you.