Some deadlines are flexible, while missing other dates means paying an additional charge for the privilege of missing the deadline. The date you agree to close a home sale is not so firm that it can't be changed, but missing the targeted settlement date can cost you plenty in extra fees and loan interest. Working to hit the exact closing date also means you can enjoy packing and moving that much sooner.
Escrow is an independent procedure handled by a licensed officer paid to make sure both the buyer and seller follow the terms of a sales contract. The term "closing escrow" describes the process the escrow officer follows to collect paperwork, have documents signed and wrangle the materials so that the buyer, seller and lender can complete the necessary steps to close the property purchase. The escrow officer assigned to your transaction develops a checklist outlining the demands made in your sales contract agreement. Once all the details are done, you sign your loan agreement and both buyer and seller sign the deed transfer, and then your sale can officially close and be recorded.
Both buyer and seller agree to a closing date. Legal contracts must include a date the agreement begins and also an end date. Everyone involved in the sale moves together to meet this important closing date. In order to change the contract closing date, the escrow officer must draw up a legal amendment to the agreement and all parties must sign and return it to the escrow officer. If the closing date comes and goes without an amendment, the agreement is in limbo and either buyer or seller might try to void the agreement.
Advantages to meeting the sales agreement close-of-escrow date include possible savings on mortgage interest payments. Your lender has your closing date and works to have the mortgage loan ready to sign before that date. When everything is ready with your home sale, your escrow officer has the borrower sign the lending papers. The lender begins collecting interest at the time the loan funds. If you're the borrower, this means extra cash out of your pocket for a home you aren't living in. If you're the late seller, you're probably going to be held responsible for the buyer's extra costs for each day of the delay. Closing on the contract date means everyone saves money.
Delaying escrow costs you money and possible moving fees. If you're the one delaying the closing, some sales agreements charge you a flat fee for delaying the close, while other agreements assess a per-day penalty for every day beyond the closing date. You might also have to pay expenses for the other party, depending on your contract terms.
Missing the closing date also means dealing with the inconvenience of having to reschedule your furniture movers, utility hookups and mail delivery service. Changing these appointments could bring additional fees or delay your moving date even further. For example, many times professional moving services can't simply reschedule to meet your new closing escrow dates. You might have to pay for storage for your stuff until your house closes, and some movers also charge a late-delivery or change-of-service fee for the new moving dates.
- Realtor.com: What Is Escrow?
- Surviving the Real Estate "Escrow" Process in California -- Important Things and Tips You Should Know, and Mistakes to Avoid
- Federal Deposit Insurance Corporation: 6500 -- Consumer Protection
- Nolo.com: Contracts 101 -- Make a Legally Valid Contract
- West Coast Escrow: Frequently Asked Questions
- Brand X Pictures/Brand X Pictures/Getty Images