When Should I Close?

• The closing date will be negotiated between buyer and seller.  The issues that will be negotiated concern time and money.
• Here are some points to help you understand why timing can be so important:
  1. If you’re living in an apartment, set the closing date according to when your lease ends.  It’s foolish to pay for both a house and an apartment, unless you can sublet the apartment or otherwise have an escape clause. 
  2. If you close at the beginning of a month and your lease expires at the end of it, you’ll be paying double rent for that month, which can be expensive. 
  3. If you close at the beginning of the month, the lender will usually require you to prepay the interest on your loan from the day of closing to the end of the month.  Therefore, the cash you’d need at closing will be more that what you’d need if you closed at the end of the month.
  4.  Remember that closing costs are tax deductible, so it may be more worthwhile to close at the end of a fiscal year than at the beginning of one.  Ask your accountant or tax preparer whether taking such a deduction would be worthwhile in your situation.
• Mortgage interest and principal payments are paid in arrears – that is, you pay on the first of every month the money you’ve borrowed the previous month.  Loan payments are computed at fixed rates, so the lender has to manually compute the amount of interest from the day of closing to the end of the month.
• If you close at the end of the month and that’s the same day your lease expires, always make sure you have a back-up place to live just in case there’s any problem with the closing.