Residential Real Estate Closings
Buying a home is an exciting yet complicated event. The process generally involves a number of different parties and advisors to help you make the appropriate decisions. Matt prides himself on keeping all relevant parties up-to-date on the pertinent information that is needed for an efficient and stress-free closing. Below is a helpful outline of the purchase timeline to help visualize the entire process:
Home Purchase Timeline
The Contract
After you find a property of interest, you must submit an "offer" to the Seller. Ideally, your attorney should be involved in writing the contract. That said, Matt understands that Buyers are often concerned with submitting an offer quickly. Real estate agents use standard form contracts, and most agents are experienced with the standard form. Consequently, Buyers and their real estate agent typically complete the contract and negotiation without the Buyer attorney's participation.
Doing so is all right ONLY IF the contract contains an attorney modification provision. This provision allows the Buyer's and Seller's attorneys several business days (typically five business days) in which to negotiate and modify the terms of the contract. The modification period is especially important for Buyers, because the contract may favor Sellers.
Real Estate Taxes
Inspection Contingency: The contract will typically provide for an inspection contingency. During this period, you will need to hire a qualified home inspector. You have several options if the inspection reveals any necessary repairs: 1) Matt may negotiate that repairs be made by the Seller prior to closing or 2) you may request a closing cost credit toward the cost of repairs. The second option allows you to make the repairs on your own by choosing your preferred repairman.
Financing Contingency: Many Buyers are pre-approved for a loan. The pre-approval gives you an idea of how much the bank is willing to lend you. Applying for the loan and receiving a loan commitment is the next step. The financing contingency provision provides time to obtain a loan commitment from a lender. A loan commitment is a formal offer by a lender making explicit the terms under which it agrees to lend money to you.
The financial contingency period (which overlaps with the inspection period) should be ample for you to apply for a loan, and the lender time to process your loan application and issue a loan commitment. A loan commitment is just that -- a commitment to lend you money. The Buyer must provide the Seller with a loan commitment before the end of the finance contingency period. Matt will monitor your lender to make sure everything happens on time. Matt’s prior and ongoing experience closing over $60 million in loans offers insights on any issues that may arise during this time. If the buyer is unable to obtain a loan commitment before the end of the contingency period, the contingency allows you to get out of the contract.
The standard financing provision in most contracts allows the Seller to attempt to obtain financing for you if you are unable to secure it yourself. Depending on the situation, Matt may recommend this remedy be removed from the contract to ensure that you dictate the lender.
Condominium Documents: If you are buying a condominium, there is a period to request and review certain condominium documents, such as the declaration, bylaws, budget and board meeting minutes. It is important that you review these documents carefully, as they set out the rules and regulations of living in the community environment of a condominium association. These documents also provide a picture of the association's financial condition and any upcoming or recently completed repairs or renovations.
The Lender
When applying for a loan, the bank or mortgage broker is required to give you some disclosures. Such disclosures may cover various items, such as the terms and conditions of your loan (rates, fees, pre-payment penalties, etc). As an example, one of the more important disclosures is the Good Faith Estimate. The Good Faith Estimate projects the charges and fees that you will pay at closing. The categories of fees include lender, title, survey and attorney fees. The actual charges at closing will vary slightly with those provided on the Good Faith Estimate.
Matt will monitor the lender to ensure the lender issues the loan commitment in a timely manner. Furthermore, Matt will make sure the lender prepares the loan package and delivers it to the title company in time for closing. Lastly, Matt will compare the Good Faith Estimate with the actual lender charges.
Title Insurance and Survey
"Title" refers to a person's ownership of property and the right to dispose of the property. "Good title" means there are no serious encumbrances or limitations on a person's ownership. When buying real estate, you receive a title insurance policy issued from the Company. This policy ensures the title accompanying your prospective property is clean of any encumbrances or limitations. You may also receive a survey of the land (unless you are buying a condominium). The survey is a drawing of the property showing the property lines, set back lines, the locations of structures, bodies of water, easements, etc.
A serious encumbrance is something that significantly interferes with your use of the property or its value, like a mortgage or tax lien. You do not want to take title subject to someone else's mortgage. However, almost everyone owns property subject to his/her mortgage. As a result, the majority of title commitments will identify a mortgage. A Seller's mortgage must be released before (or usually at) the closing. Matt will ensure the Seller removes all unacceptable encumbrances before closing.
The Closing
At the closing, the Buyer and Seller exchange the money for the property. …an exciting time.
Before the closing, Matt will ensure the deed and other conveyance documents are properly prepared, confirm transfer taxes and all the prorations are properly calculated and explain how much money is needed for closing.
The lender will require many documents are signed and notarized at the closing. Matt will thoroughly review these documents with you. After you sign, the Seller will present you with keys to your new home. Congratulations!
- What Happens at Closing - Brief guide by Ginnie Mae describing what happens during the closing.
- Closing FAQs - Answers to all the common questions about your Closing.
Post-Close Support
Matt’s service does not stop at the closing table. Use Matt as a resource even after moving into your new place. Matt has a number of resources to draw upon from real estate attorneys to accountants to contractors. Matt is always available to assist and answer any questions.