Steps to Buying a House.

Steps to Buying a House.

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You put an offer in on the home of your dreams and the seller accepted.  What do you do now?  This is an exciting and hectic time in your life, but it doesn’t have to be.  In New York State buyers and seller can represent themselves in a real estate transfer, or they can retain the assistance of an Attorney.  While the realtor helped you find the home, and make the offer, they cannot offer any legal advice.

  1. Attorney Approval.

After the seller has accepted your offer and you have a fully signed contract you may want to contact an attorney to review the contract.  Real Estate contracts will always have an attorney approval clause.  This clause provides time for your attorney to review the contract and, if needed, request changes to the contract so that you are protected.

The Attorney can cancel the contract if you changed your mind and no longer want the house, but this can only be done during the attorney approval period.  After that you are locked in unless one of the other contract contingencies comes up

The next you and your realtor should do is schedule inspections as set forth in the contract. During this time, you will have the house inspected.  The home inspector will look at the structural integrity of the house, check for mold, and make sure the heating and a/c systems are operational and in good working order.  If the house is on a private well and septic the inspector should also check these systems.  You will also want to get the home inspected for radon.

Once the home inspection is done the inspector will provide you with a report.  This report will set forth the home inspector’s findings and if any repairs are needed.  If the inspector noted any concerns which would cost more than $1500 to correct or repair they can be negotiated between the attorneys.  If no resolution is reached the contract can be cancelled if done within the date set in the contract.

While all this is going on you have applied for a mortgage, and are providing the bank with additional documentation.  Once the bank has all the documents they need a commitment letter will be issued.  The commitment letter sets forth further items the bank needs to finalize the mortgage.

If, however, the bank determines that you do not qualify for a mortgage, they will provide you with a declination letter.  This letter needs to be provided to your Attorney and Realtor immediately.  They will in turn notify the seller’s Attorney and Realtor, and can be grounds to cancel the contract if done within the dates set forth in the contract.  This is when the mortgage contingency clause of the contract will come into play.

  1. Title Insurance.

During this time, your attorney has ordered title insurance. Title insurance insures you and the bank clear title , and that there are no liens on the home you are buying.  The cost of title insurance is regulated by New York State.  Title insurance will cost the same no matter what title insurance company you choose.  Your Attorney will order title insurance for you, however, sometimes banks offer to order title insurance for you.  Sometimes the seller may want you to use their title company as a condition in the purchase contract.  It does not matter what title insurance company you use.

Every Title company follows the same guidelines and gets their information from the same sources. The purpose of title insurance is to insure both you and the bank that there are no outstanding liens on the home you are purchasing.   Once title is done a copy of the title report will be mailed to your attorney and to the bank’s attorney. If the title report shows any outstanding liens, or other problems with the chain of title to the house, it is up to the seller or the seller’s attorney to correct this title defect.  Once the bank’s attorney is satisfied that title is clear, and they have all the information and documentation they require, a closing date will be scheduled.

  1. Homeowner’s insurance.

The last thing you need to do is purchase homeowner’s insurance.  List the bank as an additional insured under your policy so in case something happens to the house, the bank will be paid.

Finally, you’re at the closing table, and the house is yours.

Kathryn S. Dell, Esq.

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