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Step1: Most people are concerned with the amount of the down payment and the closing costs necessary for their purchase. Typically, homebuyers put down 5% to 10% of the purchase price upon signing the Contract of Sale. However, it is possible to pay as little as 3% upon contract. Further, buyers should seek to reduce their closing costs by one third or one half. There are methods available which generally reduce a buyer's out-of-pocket closing expenses. I welcome your calls regarding this opportunity.
Step2: A buyer has rights and obligation when buying a home. These rights and obligation are found in the Contract of sale between the parties. Routinely, a real estate transaction begins with a proposed Contract of Sale sent to the buyer's attorney by the seller's attorney. The buyer's attorney should demand that this contract is transmitted via fax machine to ensure timeliness. When representing a buyer I fax any proposed modifications to the seller's attorney immediately to expedite a binding contract. Once the proposed modifications are agreed upon between the attorneys, the buyers can sign the contract.
Step3: The Contract of Sale lists the names of the buyer(s) and seller(s), the address of the subject premises, the purchase price, down payment, mortgage amount, and the date by which the buyer must obtain a mortgage commitment and the closing date.
Step4: The Contract of Sale contains representations from the seller stating that the roof must be free of leaks, that the electrical, plumbing and heating systems are in working order and that the premises are free from any building code violations and in compliance with municipal ordinances.
Step5: A survey of the property should be delivered to the buyer's attorney (if available). In most cases, the seller can provide a survey to the buyer, however, it may be necessary for the buyer to order a survey. The cost is approximately $400 to $500. I recommend that the buyer have the premises inspected by a licensed termite inspector and professional engineer to ascertain the structural integrity of the premises and confirm that all the appliances and systems are in working order.
Step6: The seller's attorney acts as an escrow agent and, as such, the down payment is held in an escrow account pending the final transaction. The mortgage contingency clause grants the buyer, 30-45 days from the date of the contract to obtain a mortgage commitment. A buyer is obligated to apply for a mortgage loan promptly upon signing and contract and to provide complete and truthful information regarding his/her best financial condition. If a buyer is declined for a mortgage loan despite his/her best efforts as securing financing, the buyer's attorney must notify the seller's attorney of the declination. The buyers down payment must be returned immediately. The transaction will be null and void and neither party is responsible for anything further.
Step7: Before the closing, a homeowner's insurance policy must be issued for the loan amount. The original policy and paid receipt must be brought to the closing. Also, buyers must bring identification. Driver's Licenses are fine.
Step8: The title bill consists of four distinct charges. The first is the title insurance premium. There is a mortgage policy insuring the lender for the loan amount, and an owner's policy, which insures the title in the name of the owner for the amount of the purchase price. These fees are statutorily regulated. The second set of costs is title search fees incurred in researching and examining the municipal and governmental databases. The third charge is a mortgage tax of .75% of the loan amount outside New York City, or 1.75% in New York City, plus any real estate taxes recording charges that the local County Clerk requires to record the deed and the mortgage.
Step9: A buyer must bring a bank or certified check for the amount necessary to complete the balance due to the seller, in addition to bank, legal and title insurance costs. Further, a buyer is responsible to reimburse the seller for any fuel remaining in the tank and for any taxes already paid by the seller on the buyer's behalf. I calculate the final figure required to satisfy all the cost mentioned above, based on: the title insurance bill, the bank's mortgage proceed and the tax continuation search conducted immediately prior to closing by the title insurance company.
Step10: At the closing, the buyer will sign the loan documents, and tender the check. The buyer will get a copy of the Deed transferring title to the buyer and copies of all loan documents. The Deed will be recorded and returned to the buyer's attorney and should be sent to you immediately. An attorney's final closing statement will also be issued. This describes all credits and charges paid by the buyer and seller. The buyer's tax professional will require this statement for income tax preparation purposes.