Closing Dates and Interest Payments
If you're closing on the last day of the month, you're not going to get hit with a big interest bill. But if you close near the beginning of the month, you'll have to pay more in interest.
Once you determine what time of month you want to close on the home sale, you can try to choose a day of the week that works best for you. The best day to close on a house is generally considered to be Tuesday morning, especially early in the month.
Your lender is required to send you a Closing Disclosure that you must receive at least three business days before your closing. It's important that you carefully review the Closing Disclosure to make sure that the terms of your loan are what you are expecting.
The ideal time to close is when you can ensure a thorough and accurate process—generally mid-month, Tuesday through Thursday. This timeframe avoids the Monday backlog and the Friday rush, positioning you for a smoother, more reliable closing experience.
If you need to be occupying your home by a certain date to save on rent, it's a much better deal to close at the end of the previous month (for example, January 30) instead of the beginning of the current month (February 1).
A title and escrow company can be ready for your closing any time, day or night, after hours, or even on weekends. Of course, finding a closing company willing to work outside office hours or on weekends is the key. Not all title and escrow companies will accommodate their clients in this way.
Timing Requirements – The “3/7/3 Rule”
The initial Truth in Lending Statement must be delivered to the consumer within 3 business days of the receipt of the loan application by the lender. The TILA statement is presumed to be delivered to the consumer 3 business days after it is mailed.
Can a mortgage be denied after the closing disclosure is issued? Yes. Many lenders use third-party “loan audit” companies to validate your income, debt and assets again before you sign closing papers. If they discover major changes to your credit, income or cash to close, your loan could be denied.
Lenders run your credit just before your house closes to ensure your financial situation hasn't changed and you still meet the eligibility requirements for the loan. If your credit score decreases before closing, you can risk mortgage approval.
Some buyers may be able to negotiate an immediate possession date. This means as soon as the transaction is closed and the deed is recorded, the buyer can move in. A few other common buyer possession dates may be 15 days, 30 days, 60 days, or even 90 days after closing, depending on how much time the seller needs.
Fridays are good for closing deals
A significant number of deals are signed on Wednesdays; however, this may be because that's the day of the week when sales reps are most active with their sales calls, mailings and meetings. No wonder more deals are closed when you really put in the extra effort!
The first mortgage payment is usually due a full month after your closing date — on the first day of the month. When you make mortgage payments, you're paying for the previous month, not the current month.
You and any other co-borrowers. The seller of the property or their agent. Your real estate agent and the seller's real estate agent. Real estate agents are not required to be at the closing, but may choose to attend to make sure that the closing transaction goes through.
June is usually the best month to sell a house. It's when you're most likely to reach the most potential buyers and get a price above market value. As a result, on average nationwide, June has one of the highest median sale prices and the most sales overall.
In our experience, Friday tends to be the most popular day of the week for clients to close. This means that your realtors and attorney will likely be busy that day, though there is nothing wrong with closing on a Friday.
When the Know Before You Owe mortgage disclosure rule becomes effective, lenders must give you new, easier-to-use disclosures about your loan three business days before closing. This gives you time to review the terms of the deal before you get to the closing table.
A closing may fall through for many reasons, including title-insurance surprises, buyer financing rejections, inspection failures, and lowball appraisals. Even buyer's remorse can sour a deal.
Can My Security Deposit Be Returned If My Mortgage Is Denied At Closing? If you have a contingency in place that includes an offer and purchase contract, you may be able to get your earnest money back. However, if you don't have it, you could lose it.
The Rule of 28 – Your monthly mortgage payment should not exceed 28% of your gross monthly income. This is often considered the “Golden Rule,” and many lenders abide by it.
The TRID rule provides that the borrower can waive the seven-business-day waiting period after receiving the LE and the three-day waiting period after receiving the CD if the borrower has a “bona fide personal financial emergency,” which requires closing the transaction before the end of these waiting periods.
Capacity, Credit, and Collateral
The three C's of underwriting play an essential role in the underwriting process. Regarding Capacity, your debt-to-income ratio is the most important component. Ideally, you would like your DTI ratio to be at or below 40%. There are home loan programs that allow up to a 50% DTI ratio.
The final step in the financing process is to sign loan documents. These documents will take the form of a mortgage, promissory note, and/or a deed of trust depending on your market and the lender's requirements. The promissory note is the legal agreement to accept the loan.
The contract terms will determine when you can move in after closing. In some cases, it will be immediately after the closing appointment. You will receive the keys and head straight to your new home. In other situations, the seller may request 30, 45 or even 60 days of occupancy after the closing of the home.