Better Homes and Gardens Real Estate Life

Tag: closing

  • 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.

  • Answers to Common Questions About Title Insurance

    As a homebuyer, you’re probably excited to finally be closing on your home purchase. However, for many homebuyers, closing on a home purchase comes with a lot of uncertainty.  When you begin the process of closing on a home purchase, you may suddenly find yourself faced with a lot of different costs. One of these costs includes the title insurance. To help you better understand what title insurance is, here are a few answers to some frequently asked questions.

     

    What is title insurance?

    Title insurance is a type of insurance that protects either the home purchaser’s interest or the mortgagee’s interest in a property, depending on the type of title insurance policy you purchase: The Owner’s Policy protects the home purchaser (i.e. home owner), while the Lender’s Policy protects the mortgagee (i.e. mortgage lender)

    To the extent of the policy’s coverage, title insurance protects the insured from incurring financial loss or legal obligations due to title defects, hidden liens, or other title issues that are specified within the policy. Simply put, title insurance protects your interest in a property, so you can rest assured that the home you purchase is your in fact you own, and that you will not be held responsible for issues with your title that you did not cause.

     

    What is the difference between an Owner’s Policy and a Lender’s Policy? Owner’s policy is usually purchased by the home seller on behalf of the home buyer, while a lender’s policy is purchased by the homebuyer (i.e. mortgage borrower) on behalf of the mortgagee (i.e. mortgage lender) before the home loan is issued.  Both types of title insurance policies insures a clean and clear title, protecting the insured from the financial and legal burdens of unforeseen title issues. However, a Lender’s Policy usually only covers the amount of the loan, and the coverage gradually decreases as the loan gets paid off.

     

    What can I expect to have covered in my policy? For homeowners, getting an owner’s policy protects you from a number of things (e.g. mistakes or errors that have been made in public records or during the title search). If an issue comes up that was not discovered during the title search, you are protected under this insurance. Also, if you are ever in a situation where you need to defend your title, your insurance covers the costs of negotiation with third parties and the payment of legal fees as well.

     

    What is not covered under my policy? This depends. As with any insurance, there are some risks that may not be covered under your policy. For example, this type of insurance does not protect you against anything found during an inspection of your property. Also, it does not insure against any title issues that you are already aware of.

     

    Why do I need title insurance? Home owners want to have title insurance because it affords certain privileges such as the ability to use and enjoy your home without limitations that were not bargained for, or the freedom from incurring any financial obligations due to hidden title issues, etc.

     

    For example, say that one of the previous owners of the home you are about to purchase failed to pay his state taxes, and as a result, a tax lien was place on the property 50 years ago.  Upon reviewing public records today, the abstractor makes an error and fails to notice that there is a lien on the property. Title insurance will protect you from being obligated to pay for this tax lien.

     

    Where should I shop for title insurance? To purchase title insurance, you need to find a licensed insurance carrier. The law prohibits anyone without a license to issue this type of insurance. To protect lenders and homeowners, states typically regulate these carriers heavily so that you can be confident that you remain protected after you purchase a title insurance policy from a licensed insurance carrier.

     

    As we mentioned earlier, closing on a home purchase will require a number of necessary costs that may come as a surprise to you. Talk to your loan officer, real estate agent, and any trusted professional during the buying process to get answers to your questions regarding the closing costs for your home loan and home purchase.