As you sort through the many details that go into buying a home, have you wondered if there’s a best or worst day to schedule the closing? The answer is yes: Choosing the right date and/or day of the week to finalize your home purchase could help lower your stress — and potentially save you some money.
Read on for a look at how carefully timing your closing could have benefits for you as a homebuyer.
Key Points
• The closing date affects interest costs and the length of time before the buyer’s first mortgage payment.
• Closing early in the month provides more time before the first mortgage payment is due.
• Closing at the end of the month reduces prepaid interest but accelerates the first payment.
• Avoid Fridays and holidays to minimize the risk of delays and issues.
• Consider lease agreements and HOA fees when selecting a closing date.
Who Chooses the Closing Date?
Generally, buyers suggest a tentative closing date when they make an offer on a home, but there may be some negotiations before this important day is finalized on the purchase contract. It’s also not unusual for the established closing date to be moved if the buyers or the sellers request a change.
It can be hard to predict how long it will take to close on a house. It may take the buyers longer than expected to get the home they hope to purchase inspected, for example, or to pull together all the necessary paperwork for their approval. Or the sellers may ask to modify the date to accommodate the purchase of their next home. The day also has to work for the mortgage lender, the title company, any cosigners, and others involved in the transaction.
Still, as the buyer, you can expect to have a say as to when you’ll head to the closing table. So it can make sense to be prepared to propose a day that works best for your needs.
Worst Day to Close on a House
Because the logistics can get complicated when you’re trying to find a closing date that works for everyone, you may want to focus first on avoiding what might be the worst day to close on a house. And surprisingly, that could be a Friday.
It might be tempting to schedule your closing for the end of the week — especially if there’s a holiday weekend coming up — so you can take advantage of those days off to move into your new home. But it can be a risk. If there’s a delay such as missing paperwork or a complication during the final walk-through, you may have to push the closing to the following Monday or even later in order to resolve the trouble and get back on track.
Mondays can also be problematic. Even if everything is in order for your closing, the professionals you’re dealing with may be swamped with a backlog of issues left over from the week before. Your experience may be more pleasant if you pick a day that’s not as busy.
If you can manage it, a Tuesday, Wednesday, or Thursday may be a better choice. Closing midweek can give you more time to overcome any last-minute hiccups and still get the transaction finalized without having to shift it to the next week.
Recommended: When Is the Best Time to Buy a House?
Best Day to Close on a House
The best day to close on a house for the buyer is the one that’s the right fit for your schedule as a busy employee, parent, etc. — and it must work for everyone else who plans to participate. You’ll also want to be sure to give yourself plenty of time to accomplish all the steps in the home-buying process, from getting an appraisal and inspection to arranging for homeowner’s insurance and planning and packing for your move.
Your financial needs can also play a significant role in choosing the right closing day. And getting that right can be more about finding the best day of the month to close than the best day of the week.
If you want the maximum breathing room between your closing and your first mortgage payment, for example, you may want to pick a day that’s early in the month. A buyer’s first mortgage payment is usually due on the first day of the month after a 30-day period following the closing. So if your closing is on, say, Sept. 3, you’d have nearly two months before your first payment was due on Nov. 1. But if you closed on Sept. 28, you’d only have about a month before the first mortgage payment was due, also on Nov. 1.
If you’re trying to save money on closing costs, however, you might want to avoid the start of the month. As the buyer, you can expect your lender to add any interest that will accrue between your closing date and the end of the month to your closing costs. With a date that’s later in the month, your first mortgage payment will come sooner, but you could substantially reduce the amount of interest you’ll have to prepay at your closing. Some lenders will roll closing costs into your home loan, but you will still pay them, perhaps by paying a higher interest rate on the loan.
You could also decide to compromise and shoot for a closing date in the middle of the month. With this option, you’ll pay less interest than if you’d closed at the start of the month and you’ll still have a month and a half before your first mortgage payment is due.
Recommended: VA Loan Closing Costs
Other Things to Consider When Choosing a Closing Date
Along with the money you could save on prepaid accrued interest by scheduling your closing toward the end of the month, here are a few other financial factors to consider:
Do You Have an Existing Lease?
If you’re a first-time homebuyer and you’re currently renting, you may want to time your closing so that you can avoid making another rent payment before you move into your new home. For example, if your rent is due on the first day of the month, your best closing date may be at the end of the month prior. (This could also allow you to reduce the amount of prepaid interest due at closing.)
Is the Home in an HOA?
Buyers often overlook the cost of Homeowners Association (HOA) fees when they prepare for a closing — but it’s possible those fees could rise or fall depending on the date you close. The difference in what you’ll pay might not be enough to make you want to change your closing date, but it’s worth checking out ahead of time.
Are You Asking for Seller Concessions?
Are you dealing with eager home sellers? You might be able to ask for some seller concessions as part of your home purchase. If the sellers agree to pay some or all of your closing costs, for instance, that amount could include the accrued interest the lender will charge. If that’s the case, you could close at the start of the month and enjoy a longer period of time before you must make your first mortgage payment without having to make a larger interest payment at closing. (Just be sure to check that the accrued interest will be included in the costs covered by the sellers.)
The Takeaway
So many decisions go into buying a home, it might not even occur to you to put some thought into choosing the best closing date. But picking the best day to close on a house as a buyer can have several benefits — including providing opportunities to save some money at a time when that can be so important.
The closing date is negotiable, and of course you’ll want to be open to finding a day that works for all involved. But as a buyer, you’ll have a chance to propose the best closing date for you when you make an offer on a home. So why not check your calendar, run the numbers, consult with your real estate agent and mortgage lender, and come prepared with a day in mind?
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FAQ
Does the buyer or seller choose the closing date?
Both buyers and sellers may have some input into the closing date, but typically, the buyer first proposes a closing date on the purchase contract when making an offer on a home.
Is it better to close on a house at the beginning or end of the month?
There are several factors that may go into deciding the best timing for a closing. For example, If the buyer wants to pay less toward accrued interest, a closing date at the end of the month is generally better. But if the buyer wants to maximize the time between the closing and the first mortgage payment, closing at the start of the month may be the better choice.
Does it matter if I close on my house before a holiday?
You may want to avoid scheduling your closing right before a holiday weekend. The professionals who are working on your closing may be busier at this time of year, and if an issue comes up that can’t be resolved quickly, the closing might have to be delayed until after the holiday.
How does the closing date affect the first mortgage payment?
A buyer’s first mortgage payment is typically due on the first day of the month after a 30-day period following the closing.
Is there an optimal day of the week to close on a house?
Tuesdays, Wednesdays, and Thursdays are generally considered to be the best days of the week for a closing. If something goes wrong and the closing is early in the week, it’s more likely there will be time to fix the problem and get things back on track before the weekend.
Photo credit: iStock/gorodenkoff
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