The End of the Month

Another post for today? Yes, I won't be posting tomorrow...

An open plea to Realtors/Loan Officers: For all the time and headaches it takes to settle at the end of the month, WHY DO YOU PERSIST ON WRITING SALES CONTRACTS FOR A SETTLEMENT DATE AT THE END OF THE MONTH!? If it simply boils down to the Realtor solely considering Line 901 of the HUD-1 Settlement Statement, a/k/a the prepaid interest, then the Realtor or Loan officer is very foolish.

Let me explain, their rationale seems logical - close at the end of the month, so that the prepaid interest you pay on your new mortgage would be minimal (e.g, settle on 11/30 and just pay interest on your new loan from 11/30-12/1, for on day of interest for about $50-$120 on Line 901 of the HUD-1).

Okay, fine. But here are the problems - and every month Realtors seems appalled and shocked that this happens (maybe these pitfalls weren't covered in their 60-hour training course):

1. Everyone wants to close at the end of the month, because some (not all) loan officers and Realtors were just cruising at the beginning of the month and it just dawned on them that they had to get paid for the month.

2. The settlement companies' conference rooms are booked solid from about noon-5pm, so the loan officers and Realtors get desperate (i.e., "this HAS to close today"), and there are delays in starting and finishing settlements during the end of the month - so rather than having a 30-45 minute refinance or an hour purchase, refi's can take an hour and purchases can take 2 1/2 hours.

3. The borrower really does not save that much, if any, by settling at the end of the month (see below).

Listen, I bought my home on October 2nd a few years ago - I paid the prepaid interest from 10/2 to 11/1 - about $1200 in interest. But you know what? THE SETTLEMENT WENT SMOOTHLY, THERE WERE NO DELAYS, I DIDN'T HAVE TO MAKE A MORTGAGE PAYMENT UNTIL 12/1, AND EVERYONE WAS HAPPY! I know I am barking at the moon here, but if one realtor reads this and takes the time to consider that by settling on the 4th of the month vs. the 30th or 31st of the month, that it may not be such a bad thing, then I will have done my job.