The Closing Date and Closing Period Explained
So, you’ve finally found your dream home and everything is going according to plan with both your real estate agent and the selling party.
You’ve already started writing the purchase agreement and now your agent asks you what your preferred closing date is. Since you’ve been daydreaming about the day you move into your new home for so long, no closing day can come soon enough for you. However, some circumstances require you to wait a bit longer.
You may wonder why your agent advised you to set a closing date further away, but there are several factors that you need to take into consideration. To help you get a better idea of what are those factors and why the closing date and closing period matter, we will go over the following topics:
- What is the closing date and what is the closing period?
- Why does the closing date matter?
- How do you choose the right closing date?
- Things to consider when choosing a closing date
- How to prepare for closing on a house
WHAT IS THE CLOSING DATE AND WHAT IS THE CLOSING PERIOD?
While they tie to the same process and are intertwined with one another, the closing date and closing period are different, in both their meaning and their legal function.
The closing date is the final step in a real estate transaction. It’s the date when the deal gets finalized and the ownership of the property gets transferred from the selling party to the buying party. Basically, when the ownership deeds transfer from one owner to another is when the closing date is.
The closing period, on the other hand, is the period between the time when the negotiations end to when the closing date comes. The closing period usually lasts around several weeks and is the time when both parties prepare to finalize the deal – the buyer by preparing the final purchase agreement and the seller by preparing the property for the buyer.
WHY DOES THE CLOSING DATE MATTER?
Picking the right closing date is important for the buyer, the seller, and all parties involved in the process. It gives everyone the time to sit down and prepare everything with care and without being rushed so the whole home-buying process is completed professionally and efficiently.
Having a planned, well-scheduled closing date will not only help you feel safer and more relaxed throughout the whole closing period, but it can ultimately help you save up thousands of dollars on closing costs.
On the other hand, choosing a bad closing date can lead to a series of errors and delays that may cost you a fortune or even destroy the whole deal.
HOW DO YOU CHOOSE THE RIGHT CLOSING DATE?
Give yourself enough time
Unless you’re paying in cash for the home, don’t set a short closing date. You have to settle a lot of documentation and plan everything, especially when it comes to the loan. Even if you’ve been preapproved for a loan, your lender may need additional documentation or last-minute requests you will have to provide, so leaving a bit of space for both parties to get organized can be beneficial for everyone.
Don’t choose a closing day before a holiday or a three-day weekend
Moving in before a holiday weekend may seem like a great idea, right? You’ll have time to sign everything off, pack from the old house and unpack in the new one, organize everything, set up the decorations and settle down before the weekend ends. However, attorneys, lenders, and other professionals involved in the process will not be as eager as you. To be able to meet your needs, they might rush to complete the whole documentation which can result in costly mistakes.
Be ready to move in on the closing date
There is no point in setting a closing date before you’re able to move into the house. The house will be sitting empty while you’re getting everything ready although you may be able to save money on prepaid interest.
Check with your new utility companies
Before you set a closing date, make sure that your utility companies can service you on that day or set up everything before you moving into it. Living without water, electricity or air conditioning even for a day can be a true nightmare for many.
Avoid closing on the end of the month
Companies, including lawyers, appraisers and other professionals are the busiest at the end of the month because it’s the most convenient time for a closing day for most people. This means that the people working on your closure documents may be under pressure to get all your papers in order, and we all know that pressure and rushing everything can lead to major problems, problems that can cost you thousands of dollars.
THINGS TO CONSIDER WHEN CHOOSING A CLOSING DATE
The closing date may change
Always keep in mind that different circumstances may occur on both yours and the seller’s side that will cause the closing date to get postponed. You might struggle to find the necessary documentation your lender asks for, or maybe the seller cannot prepare the house quick enough for you to move into it on the closing date.
The occupancy date can’t change
Once you set the move-in day, and sign the contract, it’s final. If the seller doesn’t release the property by that day at the latest, they will have to pay rent for all days they stayed in the house after the closing date. If this period gets prolonged for more than you’re comfortable with, you can activate the occupancy contingency (if there is such contingency) that lets you walk out of the deal.
HOW TO PREPARE FOR CLOSING ON A HOUSE
Go through the documentation
If you’ve done any home inspections or appraisals, make sure to reread them once again. You may have missed something important during the first read that would cause a last-minute change in the contract.
Also, organize your financial documentation. Make sure you bring your identification, income statements (pay stubs, T-4’s, etc), asset statements (all economic resources that you own), insurance information, and a copy of the agreement along with other relevant documents.
Make a final walk-through with your agent
The safest thing to do is go to the property 24 hours before the closing day along with your agent, so you can check is everything is as promised. By this time, the previous owner should have left the property and have their belongings cleared out which will allow you to test the stove and dishwasher, check the kitchen lights, flush the bathroom toilets, open and close all the windows, opening and closing doors and anything else you would like to check. If you discover some problem with anything, make sure to make your agent aware of it so he or she can advise you on what the best course of action is and how you can protect your interests.
In Summary
Yes, the closing date and closing period can be stressful, complex and take a lot of your time and money, but it’s all worthwhile in the end.
Having everything ready beforehand is even better. You will stroll through the whole closing period with less stress and fewer tasks to fulfill, allowing you to fully enjoy the moving process and getting settled in your new home.
