Should you close at the end of the month?

A delay in approval of the buyer's financing can hold up closing as well, says Phyllis Yanagihara, a certified senior escrow officer at Master Escrow in Glendale, Calif. In a perfect world, she says, buyers' loan documents would show up well before the scheduled closing date. In reality, these documents more often arrive late in the afternoon the day before the closing. Then, Yanagihara says, "it's all-hands-on-deck, let's try to get it done."

A holiday, particularly if it lands on an end-of-the-month Friday, adds to the time crunch and can trigger an extra two or three days' delay, Yanagihara says.

Buyers and sellers should avoid scheduling out-of-town trips or vacations during a transaction or soon after the target closing date. Bennett says this sort of bad timing is "shockingly common" and can result in all kinds of hassles and added costs.

Sellers may have a say

Even in a buyer's market, buyers don't control everything in the transaction. In fact, Yanagihara says, sellers might have their own reasons to close at a specific time of the month. Sellers who are buying another home might want to schedule simultaneous closings. Sellers also might want to close before the next property tax installment or homeowners insurance premium is due because if the closing agent can't verify that payment, then its full amount, plus any late charges, will be held back from their proceeds from the sale.

Closing early in the month can complicate the seller's final mortgage payment, especially if it's on autopilot, but can also save interest expense on an existing mortgage, unless, says Thompson, the mortgage is insured by the Federal Housing Administration. In that case, the seller usually must pay an entire last month of interest, regardless of when the sale closes.

If the FHA loan amount is relatively small, say, $100,000, the extra interest might not be that significant, Bennett says. However, a larger loan amount combined with an early-in-the-month closing could cost the seller several hundred dollars. The only way to avoid that is to close on the last day of the month.

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