Better Homes and Gardens Real Estate Life

Category: Closing

  • Timeline for Closing on a House

    There are a few steps that you will need to navigate as you prepare and complete a closing on a new home. Below is a timeline you may want to consider so that you will be ready for the closing 30-45 days after your offer letter has been accepted.

    Negotiate the Offer

    Days 1 to 3: Once you make an offer on the home, the sellers review it and provide you with a counter-offer. Negotiations can take several days, and the final offer should establish the following:

    • What is included in the purchase
    • The closing date
    • The moving date

    Book a Home Inspection

    Day 4: After you have a signed final offer from the sellers, you should schedule a home inspection on the property you intend to purchase. An inspection is optional, but it is highly recommended. Through the process of an inspection you learn more about the home and it provides you with an opportunity to request that the seller make repairs if necessary.

     

    Finalize the Purchase Agreement

    Days 7 to 10: Now that you have had the inspection done and have consulted with the sellers, you can finalize the purchase agreement. The purchase agreement must be agreed upon by both the buyers and the sellers in order to move forward.

     

    Complete the Mortgage Application

    Day 14: It is time to make an appointment with your loan provider and finalize your mortgage application. Your loan officer will assist you with all the necessary paperwork to complete the application and will send it forward for final approval.

     

    Order an Appraisal

    Days 15 to 20: The mortgage company will need an appraisal done on the property to estimate its value. Once the appraisal is completed, the loan is one step closer to being approved. The mortgage company will review the results of the appraisal and determine if the loan is acceptable considering the value of the home. In some cases, additional paperwork is required. In most situations, the mortgage company can evaluate the appraisal and complete the loan application process within the time limits established in the purchase agreement.

     

    Receive Final Loan Approval

    Days 25 to 45: Your lender will give you a final loan approval, and you will be considered clear to close on your new property. Once you have received your final approval, all you have to do is to start the countdown until your closing date.

    Once you have the cleared any obstacles that might be in your way to close, all you have to do is wait for closing day. Your closing is typically 30-45 days after the offer has been accepted. It also depends on the deal that you negotiated with the sellers of the home. A closing day is a big event. Once all of the papers have been signed, and all the checks have been written, the house will be transferred into your name. You now are the proud owner of a new home that is all yours to enjoy!

  • Ways to Minimize Closing Costs

    Many homebuyers save up significant amounts of cash in order to make down payments on their new homes, only to be surprised by how much additional cash they need at closing. Closing costs can vary depending on several factors, so it can be difficult for homebuyers to determine exactly how much money they need to save up for this expense. Fortunately, there are several ways a prospective homebuyer can cut back on total expenses when closing on a home.

    Opt Out of Paying Mortgage Points

    Even though purchasing mortgage points can be a smart strategy for homebuyers, these points are often some of the most expensive additions to a homebuyer at the time of closing. When you purchase a mortgage point, it lowers the monthly interest rate you will pay on your loan. While this strategy can save you money over the lifetime of your mortgage, buying one point will cost one percent of your total loan, which could add up to several thousand extra dollars at closing. If you’re serious about keeping your costs down at the closing of your home purchase, it might be better to skip this option.

    Obtain a Mortgage at the End of the Month

    Not many people realize that they can save some upfront cash when they’re closing on a home if they obtain their mortgage at the end of the month versus the beginning of the month. Just to give you an illustration, when your loan is approved, the prorated mortgage payment for the current month will be added to your closing costs. This means that if you close on your house at the beginning of the month, you’ll have almost a full month’s mortgage payment that’s due at the time of closing. If you close at the end of the month, however, your prorated payment will be much lower. Keep in mind, however, that you are not paying any less for your mortgage overall, but it does lower your initial costs.

    Negotiate with the Seller

    One of the best ways to lower your costs is by simply asking the seller to pay the closing costs. This can be especially effective in a buyer’s market or in a situation in which a seller is in a hurry to close the deal. The best way to successfully take advantage of this strategy is to work closely with your real estate agent, who will be able to better assess your individual situation and determine which costs you should ask the seller to handle.

    Closing on a home can mean that new homeowners have to put up a significant amount of cash. Fortunately, there are ways to close on your home and still walk away with money in your pocket at the end of the process. Talk with your real estate agent and your mortgage lender to find out if one or all of these strategies could work for you.

  • Closing on a Home Purchase

    Once you have finally located the home of your dreams and negotiated the purchase price, it is time to go through the home closing process. At the closing, the title or deed to the home will be transferred and any mortgage documents signed. Typically, closing on a home will entail the review and execution of numerous legal documents. A home closing will also usually incur significant fees. A better understanding of the home closing process and the fees you may need to pay will make you feel more comfortable when the time actually arrives to participate at your own closing.

    Your Better Homes and Gardens Real Estate agent will go over most of the fees and costs associated with closing on a home before you put in an offer. Many closing costs can be paid by either the buyer or the seller. Because of this, which party will pay the closing costs is commonly an important part of the negotiating process for the purchase of a home. If you will be financing the purchase with a mortgage loan, you will need to make sure to obtain all the appropriate loan documents before you can close on a home.  The lender must provide you with a good faith estimate of the costs associated with the loan within three days of your completed application. While the actual cost will vary widely, some of the common costs that must be paid on the day of closing include the following:

    • Loan Fees—These may include a loan origination fee, points, appraisal fee, inspection fee, credit report fee, insurance application fee, and an assumption fee
      • Insurance Premiums – Mortgage, hazard and flood insurance premiums are often required to be paid in advance
      • Reserves – A lender may require you to deposit funds in an account to ensure payment of future tax and insurance obligations
      • Commission Fees—Paid to your agent for services rendered
      • Closing Costs—Agent’s fee for preparing the documents and presiding over the closing, title search fee, notary public fee, attorney feesThe actual closing on a home typically takes place at an attorney’s office, title company or escrow agent’s office; however, laws and customs vary by state and even by areas within a state. The closing agent will begin preparing for the home closing process once an offer to purchase has been accepted by the seller. The first step is generally to request a title search. This checks the history of the property through public records and looks for any potential defects in the title such as a tax lien or judgment attached to the property. The closing agent will then draft all of the legal documents needed to transfer ownership of the home from the seller to the buyer. A HUD-1 Settlement Statement will also be prepared. This important document outlines in detail all of the costs associated with the home closing process for both the buyer and the seller.

    On the day of the closing, both the buyer and the seller, along with their respective real estate agents, will appear at the closing agent’s office. Numerous documents will be reviewed by the parties and signed. Once everything has been signed, the transfer of the property from seller to buyer is complete and the closing is finished.

  • Closing on a Home in New York

    If you have finally found your dream home in New York and have successfully negotiated the purchase contract, you are just one step away from home ownership. The final step for a buyer or seller in a real estate transaction is the closing. Although the closing process is similar in all states, there are some differences as well. Understanding what to expect from your New York real estate closing can help you better prepare for the big day.

    A New York real estate closing can be quite a production. Much of this reflects the fact that New York homes for sale are often some of the most expensive real estate in the country. Consequently, the amount of money changing hands at a closing in New York is often significant, even for a relatively modest home. As a result, closing costs in New York are among the highest in the country. For example, average closing costs on a $200,000 loan in New York for 2012 run $5,435. Exactly who pays these costs will depend on the terms of the contract you negotiated for the purchase of the home. The lender fee, attorney fees, and title search and insurance fees are among the more expensive costs incurred when closing on a home in New York. One thing that drives up the closing costs in New York is the number of attorneys typically present at a closing. Although anyone involved in a closing has a right to bring an attorney with them in any state, it is more common in New York than in other states. Both the buyer and the seller, as well as the lender, usually have legal counsel present at the closing.
    At a New York closing, the buyer is usually required to be present to sign all the necessary loan documents; however, a seller may elect to sign all of his or her required paperwork ahead of time and allow an attorney to represent them at the closing. In rare circumstances, a buyer may be represented by someone else pursuant to a Power of Attorney.

    While each closing is unique, there are some common forms and documents that will be used at a closing in New York, including the following:

    • Truth in Lending Statement—a form required by the federal government that shows you what the true cost of financing your home
    • HUD Statement—a form required by the Department of Housing and Urban Development if the buyer is using a conventional mortgage which lists the amounts paid and received by the buyer and seller
    • Closing Statement—a statement that shows exactly how the money was applied at the closing
    • Mortgage Note—the document the buyer signs representing the promise to repay a loan if financing the home

    As a general rule, the documents needed for closing on New York homes for sale will be prepared by the appropriate attorney. Whether you are the buyer or the seller, you will have the opportunity to review these forms prior to the day of closing. Along with the documents you have reviewed, you may also be required to bring other documents or forms to the closing. Most importantly, you will likely need to bring certified or cashier checks that represent your share of the closing costs. Again, you should know ahead of time exactly how much the checks should be written for and to whom they should be made out to.

    Taking the time to understand the New York closing process and preparing appropriately should make the entire process run much smoother when the day arrives.