As mentioned in a previous blog entry, the closing date is a deadline. It's the day the ownership of a property is conveyed from one owner to another. Extending the date can have a few financial consequences, however, so here's a few things to be aware of which may change if it happens.
This is the one you buyers may be ok with. The further back in a month the closing date falls, the less prepaid interest one must bring to closing. Here's the kicker: as far as when your first mortgage payment is concerned, you finish out the month in which you close, then skip a month. The first payment isn't due until the following month. So while one may bring hardly any prepaid interest to closing by closing on March 31, the first payment would be due May 1. However, closing on April 1 would make your first payment due on June 1, but would require an entire months worth of prepaid interest due at closing. Something to be aware of when selecting a closing date with your offer.
Property taxes, and possibly HOA dues, are prorated by the title company at closing based on the actual closing date. The seller is responsible for them for the amount of time they lived in the home during the calendar year. Extending closing by a few days would result in a few more days worth of taxes or dues being guaranteed by the title company to be paid out of your profits. A longer extension would be more.
Interest Rate Locks
Lenders will lock the interest rates when it appears they may go up in an effort to keep them as low as possible for their clients. If the interest rate lock has an expiration date, and the closing gets pushed outside of the expiration date, it will cost money to keep the interest rate where it was when it was locked. This is more prevalent with builders, but also happens in resale homes. Even if the delay is not caused by the buyer, this could still come back as an expense.
More likely than not, moving companies are booked in advance. Some of them do have expenses for canceling moving on the date of service, or even for rescheduling. It's beneficial to find out if the company you're using has a fee for this, even if it's not your fault.
If the closing date needs to be extended, it needs to be done early in the contract to allow for any of these expenses to be dealt with early on. I always make sure to contact all the parts involved to see what a realistic closing date will be. Some of this can be avoided with a Sellers Temporary Leaseback, some of it by asking basic questions before writing up a contract.
So if you're in the market to buy a home, Contact Me Today! I can help you get set up with mortgage and insurance people to make sure you're able to buy a home and have the best coverage.
You can also get a copy of my Home Buyers Handbook when buying to learn about the process!