DONALD J. La GREGA
Attorney at Law
507 HICKSVILLE ROAD
MASSAPEQUA, NEW YORK 11758
PURCHASING YOUR HOME
Types of ownership:
- Traditional single family dwelling;
- Cooperative apartment;
- Home Owners associations.
Things to do while shopping for your home:
- Choose an Attorney;
- Shop for a mortgage lender;
- Shop for an engineer;
- Obtain pre-qualification letter.
Making your offer (binder):
- You should only sign subject to attorney’s approval and engineer’s report;
- Offer should contain (i) purchase price, (ii) deposit amount on contract, (iii) amount of the mortgage you intend to apply for, (iv) anticipated closing date. (you should consider the time it will take to obtain a mortgage commitment and you may need additional time to close if you are obtaining any Municipal Grants.)
- Try to negotiate the lowest contract deposit. Five Percent (5% ) or less depending on your financing. Ten Percent (10%) is not the Law nor is it a standard you must agree to. The deposit is a matter of negotiation between you and the seller.
- You should verify the real estate taxes. The Realtor should be able to provide you with the tax map information (section/block/lot). Most counties have the tax information for the properties on line.
- Once you have the accepted offer you should contact your Attorney and have the Realtor contact the attorney with the contact information for the Seller’s Attorney.
- Once your offer has been accepted and you have obtained an acceptable Engineer’s report you are ready to sign a contract to purchase your home.
- The contract will typically set out: (this list is not intended to be all inclusive but to set forth the most common elements of a typical Residential Real Estate Sale contract.) The Contract and your Mortgage application should reflect your name as it appears on your drivers license.
- The purchase price
- Contract deposit
- Balance due at closing
- Seller’s concession ( if any)
- The exact address of the property you are purchasing
- What is remaining at the dwelling (appliances, etc.)
- Closing date
- Mortgage contingency amount
- Seller’s obligations regarding certificates of occupancy –“C/O” (you should advise your attorney if there have been any additions to the home.)
- Seller’s obligation to make repairs if any (typically the home is sold as is but the contract should contain a representation that the plumbing, heating/cooling , electrical systems and the appliances are in working order and that the roof will be free of leaks.
- Your right to re-inspect the property before closing
- The seller’s obligation to deliver good title to the property
- The seller’s obligation to deliver the property vacant and broom clean.
- Once you have signed the contracts, they will be sent to the seller’s Attorney for their signature. When your attorney receives fully executed contracts, a copy is provided to the lender and a title report will be ordered. When you receive your mortgage commitment you should ask your attorney to order and obtain a new survey of the property. It is preferable to obtain a new survey as opposed to using an older one as the new survey will show any discrepancies as to the property lines.
- A closing date cannot be scheduled until you have received your commitment, from the Lender, the title report has been completed and approved by the lender’s attorney and your lender has cleared your file to close. The scheduling of the actual date will need to consider not only your schedule but the schedule of the lender’s attorney, the Sellers and the Attorneys.
- You will need to obtain homeowners insurance. The amount of insurance and lenders’ information should be contained in your commitment and your insurance company should be able obtain that information from the Commitment. You will need to provide the lender with proof of insurance in the appropriate amount along with a paid receipt for one year from the date of closing. If the property is in a flood zone you will need flood insurance. This will be stated in your commitment. If your property is in a flood zone or near the water you should start shopping for the insurance early as several Insurance Companies are not issuing new policies in those areas.
- Prior to closing you will need to inspect the property to ensure that is in the proper condition. Check all the appliances, heating and cooling systems. Electrical and plumbing systems. Look for any evidence that the roof has been leaking. Make sure the seller has removed all of their possessions. Tell your Attorney if there are any problems. If you forget to check a system and close the transaction you will be responsible for the repair. Unless the dwelling is “New Construction” there are no guarantees beyond closing.
- Your Attorney should contact you with what Bank checks to bring to closing and how much you will need to have available in your personal checking account for closing costs. Make sure you bring your Photo drivers license and another form of identification and your checkbook.
The Mortgage Contingency:
- This provides that your obligation to purchase the home is subject to you receiving within a specified time frame a commitment from a lending institution to lend you the funds (the mortgage loan) to enable you to complete the purchase.
- Be aware that most contracts contain a representation of your income and an obligation to pay off any debts if it is a requirement of your commitment. You should ask your lender if any of your debts will have to be paid off as a condition of the commitment.
- The contingency may contain other representations by you as to your creditworthiness. The Seller is taking the property off the market so he will want some assurance that you will obtain the mortgage.
- You are responsible for all fees and expenses incurred in connection with the closing of the mortgage loan. You should receive a good faith estimate of closing costs from your lender. You should bring this with you to your attorney to estimate the total closing costs. Typical closing costs include all of your bank charges, title insurance charges, adjustments for real estate taxes and fuel and attorneys fees.
You typically pay the bulk of your closing costs to two entities the bank and the title company. These costs typically may include some of the following:
- Lender’s origination fee
- Appraisal fee
- Application fee
- Document preparation
- Tax service fee
- Credit report fee
- Interest for the month of closing
- Tax and insurance escrows
- The Bank Attorney’s fee
- Fee title insurance. This insures that you own the home
- Mortgage insurance. This insures that the lender has a valid mortgage
- Recording fees
- Survey fees
- Municipal department search fees
- Mortgage tax
The closing is normally held at the office of the lender or it’s Attorney. You as the buyer/borrower will be singing numerous documents that the lender and the title company will require. The Lender’s documents will contain a Note and Mortgage to create and secure the loan that it has made to you. You will sign many disclosures that the lender is required to deliver to you also affidavits and other documents that the lender requires. At closing the seller will deliver to you a Deed transferring ownership of the property from the seller to you. You should make sure your name is spelled correctly on the Deed. The original deed is taken by the title Company to the County for recording. You will receive a copy at the closing. Once the Deed has been recorded by the County ultimately it will be sent to you. The amount of time varies by county. Additionally you will receive your Title insurance Policy. Many companies are now providing it at the closing. You should ask your Attorney for copies of the survey and all certificates of occupancy. After the Closing your Attorney will send you a Closing Statement of the Transaction.
The purchase of a home whether it is your first, second or third is always a major investment for most people. As a result it can be a stressful and anxiety period of your life. Your Attorney is there to protect your legal rights as they are set out in the contract you signed originally. There are never any guarantees, interest rates can go up or down. Whether you should lock in an interest rate or not, is a financial decision you will need to make. As you choose your Attorney, Mortgage Lender, and Engineer, it should be a Professional with a level of experience in their field that you trust.
At the law firm of Donald J. La Grega our goal is to protect your rights, alleviate your stress and make the purchase of your first home a pleasant experience.
DONALD J. La GREGA
Attorney at Law
507 HICKSVILLE ROAD
MASSAPEQUA, NEW YORK 11758