Purchasing a home should be an exciting and joyous experience. However, it can often be a stressful and scary experience if you are not equipped with the proper information. My goal below is to put together a general outline for a prospective purchaser. Having a general idea of the process can help to relieve some of the stress and help avoid mistakes and delays.
Please note that every transaction is different based on the individual terms agreed to in the Contract of Sale and other circumstances which may arise. Therefore, please note that this Guide is being provided for informational purposes only and in no way should take the place of the advice of an attorney and/or accountant with regard to your particular situation.
Best of luck in the purchase of your home!
Step 1: Offer, Acceptance, Binder
If you are working with a real estate agent (and hopefully you are), the first step is to make a bid on a home which you are interested in buying. Your agent will ask you to sign a binder which sets out some of the main terms of the deal such as the purchase price and items which might be included in the deal. Usually, it will also be subject to an engineer’s inspection and attorney review. If the seller accepts the bid, the binder will be sent to the real estate attorneys to draw up contracts. While that is taking place, it is highly recommended that you do an engineer’s inspection. The home you are purchasing is likely your biggest investment so it is wise to make sure the home is structurally sound.
Note: If you are not working with real estate agents and you make an offer directly to the seller, you will skip this step and move to Step 2. However, it is recommended that you still do an inspection before signing the Contract of Sale. (And again, as a Staten Island real estate attorney, I highly recommend retaining the services of a qualified agent, so hopefully you won’t skip any steps.)
Step 2: Contract of Sale
The seller’s attorney will draft the Contract of Sale and send it to your attorney. Tell both your real estate attorney and your real estate agent if there are any issues that come up in your inspection. Your attorney should send proposed changes to the Contract back to the seller’s attorney for review (including any items you may want repaired). Once all issues are ironed out, you will have an appointment to meet with your attorney and sign the Contract. Your attorney should explain the Contract to you in great detail. After signing the Contract, your real estate attorney will send it along with your downpayment to the seller’s attorney. Once the sellers sign the Contract, the seller’s attorney will deposit your downpayment into his escrow account to be held until the closing or until the transaction is cancelled. (Staten Island real estate attorneys representing both sellers and purchasers have experience with Contracts of Sale, but assuming you do not, make sure your attorney takes the time to answer all of your questions.)
Step 3: Mortgage Application
Once the Contracts are fully executed, it is now time to begin the Mortgage application. Your loan officer and/or mortgage broker will assist you with getting the documents together to submit for your application. If at any time you are unsure of something, you can always ask your attorney for advice. If you are approved for your loan, you will receive a Commitment from your lender. Review your interest rate and the expiration date on the Commitment. Also be sure to read the conditions you must satisfy in order to close on the loan.
Note: Receiving and signing a Mortgage Commitment can have legal ramifications between you and the seller. If you cannot satisfy all conditions which are listed on your Commitment, do not sign the commitment.
Step 4: Title Search
Once you have a Mortgage Commitment, your real estate attorney will order a title search from a Title Insurance Company. A title search will reveal any liens, judgments, or violations which affect the property or any of the parties to the transaction. Usually, the seller is required to provide clear title to the property – so that you will take ownership to the property free of all liens and violations. The title company and the Staten Island real estate attorneys (or attorneys elsewhere in New York State) work together in order to clear any outstanding title issues. At your closing, the title company that ran the title search will provide you with title insurance. This is an insurance policy that covers your ownership rights in the property and insures that you have clean, good title to the property you are purchasing. Once the seller has cleared any and all title issues and once you have satisfied all your lender’s conditions, you will be clear to close.
Step 5: Closing
The closing is the final step and the culmination of everyone’s work on the transaction. All the parties to the transaction will be present with their respective attorneys. Even your lender (i.e., bank or lending institution) will be represented by an attorney. At the closing you will sign all the loan documents and your lender’s attorney will give you the proceeds of your loan which will, in actuality, be given to the seller and credited towards the purchase price. The seller will sign the deed of the property, transferring ownership of the property to you. Time to enjoy your new home!
Disclaimer #2: This information is based on procedures in the State of New York and is intended to inform, not advise. Be sure to consult a qualified Staten Island real estate attorney to assist you in the purchase of your Staten Island home (or a real estate attorney in your locality if it is elsewhere). Please contact me with any questions or concerns.