Do Not Hold Your Next Real Estate Settlement at the End of the Month

You've found your dream home, signed the contract, and gotten approval for your loan. All you need to do now is schedule a settlement date. Would you prefer a date early in the month or near the end - and does it really matter

Before you answer, consider this: Approximately 70% of all home purchase settlements occur in the last week of the month, and 75% of those close in the last two days of the month. People used to try to close their transaction by the end of the month for one simple reason: Settling in the beginning of the next month would cause you to pay an extra month's worth of interest. Naturally, it made sense to avoid this unnecessary cost.

But this is no longer true. In fact, the least expensive time to settle on your home is now in the first week of the month, not the last. By settling at the beginning of the next month, instead of at the end of this month, you actually will save money, enjoy better service, and be assured of a smoother transaction. It may sound impossible, but it's true.

Although the reasons are numerous, the first one is obvious: Consider that half of all real estate settlements occur in just two days of each month. Would you want to run a restaurant where half of all your patrons arrive on the same two days? How could you provide high-quality service without burning the food?

Anyone who has ever eaten at a busy restaurant knows how frustrating it is to try to get the attention of a waiter serving too many tables, yet that's exactly what awaits you if you settle at the end of the month. You know that the busy season for accountants peaks on April 14; for florists it's Valentine's Day; toy store owners are busiest at Christmas; and for restaurants, it's Mother's Day. In the real estate settlement industry, the "busy season" is the end of every month!

Therefore, you'll enjoy much better service by settling at the beginning of the month instead. Because so few people choose to settle at that time, you'll not only be able to pick any time of the day you want for your appointment, you also will have the undivided attention of the settlement company's staff. Imagine going to a five-star restaurant for dinner at 5 p.m. - by arriving so early, you'll get your pick of tables and enjoy wonderful service.

Don't worry that closing in the next month will force you to pay extra interest costs. Today, many lenders are equally eager to reduce the work load they face at month end, so to encourage you to delay, they now pay you to delay settlement by prorating the interest on the loan. Unfortunately, many real estate professionals continue to perpetuate the myth that consumers will save money if they settle at the end of the month. It's simply not true.

So, the next time you buy or sell a house, consider making your settlement experience more pleasant. Check with your lender to see if it offers an interest credit program, and if so, plan to hold your settlement at the beginning of the month. You'll be glad you did.

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