LitaWrites (real_lawyer) wrote,

Hell Week

In my experience, the last week of the month is the busiest in real estate. There’s a valid reason for this, and a bogus one as well.

Most leases for housing expire at the end of a month, so renters push to close (and move in) before they have to pay their landlord any more money. That’s a totally legitimate reason to pressure your attorney to get everyone on the same page and close before the first of the next month.

Then there’s an ersatz reason to close, based on the advice of uninformed or ignorant mortgage reps and RE agents. They’ll tip off the borrowing home buyers that they should close at the end of a month to wink, wink save money, as they’ll owe less money in interest. However, they never mention a very important “side effect” of their advice: the buyers’ first mortgage payment is due a month earlier.

For example, a buyer who closes September 27 only owes the bank four days of interest for the month of September, while a buyer who closes October 5 will be obligated for 26 days of interest at closing. However, here’s the rub:  September borrowers will have a mortgage payment due November 1, but those closing in October delay their first mortgage payment until December 1!

It’s a fact of life that lenders rarely lose; you can’t outsmart them by closing at the end of a month.
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