Why do we try to close on homes at the end of the month?

The deadline for the end of the $8,000 is rapidly approaching. Normally the last Friday of the month is the favorite time for Realtors to close a home loan for sellers and buyers. The 28th of November is the last Friday, and the last possible day to close for the tax credit is the following Monday. Those days are going to be like the Gunfight at OK Corral, all guns blazing, hostilities on display, and the more than usual biblical wailing and gnashing of teeth. If you are trying to close on the tax credit, do me a favor, if your Realtor suggest one of these two days, just say no. Hey, if you have to you have to, but if you can close with a margin of error, you are better off. Let's discuss why Realtors suggest this.

First, the last Friday gives you the lowest closing cost in that month. You pay interest to the end of the month becasue your payments are always in arrears, paying for the previous month. I think Realtors very often think this is in your best interest, but I think not. These days are the most heavily booked. This means the error factor is exacerbated. The closing companies are overbooked, the lenders are not going to hire people just to accomodate you, and it only takes one or two problem closings to throw the schedule into the toilet. Do you want to be the one with the 4:00 Monday closing on November 30th? I wouldn't want to be.

Second, maybe the middle of the month would be better. Yes your closing cost are higher. You pay around two weeks of interest, but there are advantages. First, this is a slower closing time. Lenders are less burdened, title companies are less booked, and Realtors have plenty of time to correct mistakes on your closing statements. Yes they do happen, and it is so much quicker and easier to make corrections. So why pay more for an accurate closing? There is another advantage. it is that your first full payment which includes principle, taxes, and insurance as well as interst is now around 45 days away. From a cost out of pocket, those two weeks give you a little cushion and besides that you got to pay to own a home daily anyway. But wait, there's more!

Buying a home is one big part of the American dream. Having two hour delays or more at the end of the month, lender closing departments that are stressed, and listening to the problems are people are having, does nothing to make the end of this journey pleasant. Let's get over this closing at the end of the month ordeal just because it has become customary. If you are closing on your tax credit, please push for an earlier closing, then you will look back and say, that was a great experience, besides gnashing of teeth is bad for your health.