Buying or selling a home is a major transaction. The sale price alone should indicate how extraordinary such a transaction is when compared to the financial decisions that are part of everyday life. Home ownership can provide you with many benefits such as long term investment and tax advantages. Mistakes in the sale or purchase of a home can burden you for years to come. A well handled transaction can provide pleasure and contentment.
STEPS IN BUYING A HOME
· Make or accept an offer.
· Inspecting the home.
· Agreeing on repairs or improvements, if necessary
· Negotiate terms; Sign the initial contract and make necessary deposits.
· Applying for a mortgage.
· Searching the legal title and obtaining a survey.
· Clearing liens and title exceptions.
· Preparing documents to close title.
· Obtaining title and home insurance.
· Closing title.
· Recording the deed and mortgage.
USING AN ATTORNEY
In order to protect you in the purchase of your investment, you should consult an attorney prior to signing a contract to buy a home. An attorney can protect you by making changes to a contract that addresses your particular needs. For example, a provision in the contract can give you the right to cancel the contract and receive a return of the deposit if you cannot obtain mortgage financing.
AN ATTORNEY’S ROLE
Preparing or reviewing, negotiating and explaining the Contract of Sale.
Helping you with home inspections and negotiations related to the inspections.
Assuring that you obtain good title to the property.
Coordinating with the mortgage lender for the new loan for the buyer or arranging for satisfaction of the old loan for the seller.
Assisting in the resolution of problems relating to the transfer of occupancy, closing date and possession.
A mortgage is a loan from a bank, mortgage company or other financial institution which makes up the difference between your payment and the selling price. The mortgage also includes interest to be paid over a designated period of time. The buyer will often need a mortgage to purchase a home. The contract should provide that the buyer is given an adequate amount of time in order to obtain a mortgage commitment. It should also provide that if the buyer cannot obtain financing, the contract will be declared void and the seller will be free to sell to someone else. The buyer will usually receive a return of the downpayment.
A buyer may sign a binder which is submitted to the seller to start the home buying process. A binder is essentially an agreement to sign a Contract of Sale and contains the terms of the transaction. The Contract of Sale is a legal document that sets forth the material terms of the transaction including the purchase price and determines the rights of the parties in the transaction. It also describes the property, sets forth the financial terms of a sale, closing date, rights and procedures regarding inspections, along with several other time limitations and procedures that are to take place prior to closing. As with most contracts, it is just as important to consider what is left out of the contract as it is to determine what is included. An attorney will advise you on the necessary precautions to take while negotiating the purchase or sale of a new home. Therefore, you should consult an attorney when you begin your home purchase or sale process.
Most purchase contracts provide for a cash deposit to show the seller that the buyer is serious. The contract states who will hold the deposit and how it will be applied. Generally the seller’s attorney holds the deposit in escrow. Your attorney can advise you regarding issues that effect your rights to the deposit.
TITLE SEARCH, SURVEY & TITLEINSURANCE
The deed you receive at the closing from the seller is the “Bill of Sale.” This serves to transfer the seller’s interest in the property to you. The title may be limited by easements or building restrictions that affect your use of the home. Easements may give utilities or government authorities the right to use a part of your land for electrical lines, sewers or drainage. Your attorney will obtain a title search and advise you of any limitations that may interfere with the use of your home. A survey should be obtained prior to the completion of the purchase. Additionally, the records of the Building Department will be searched to insure that there are no building violations and all municipally required certificates of occupancy exist.
FEES and CHARGES
Many fees and charges must be paid as part of the sale or purchase of real estate. Your attorney should provide you with guidance regarding the amount of these changes and assist you in minimizing your expenses.
These expenses include:
· Title Insurance and Examination Fee
· Lender’s Closing Fees
· Municipal Searches
· Survey or Survey Inspection
· Sale Commission
· Insurance, Taxes and Tax Escrow
· Mortgage or Transfer Taxes
· Recording Fees
· Cost of Inspections
· Personal Legal Fees
Knowing what expenses to expect can help you plan ahead for meeting your financial obligations.
“CLOSING” refers to the time that the transfer of a home takes place. The deed is tendered and the balance of the sales price is paid. The keys are transferred from the seller to the buyer.
The purchase and sale of a home is a complicated transaction. It is probably the largest purchase or sale you will make in your lifetime. You should seek the advice of an attorney for assistance in order to protect yourself against expensive mistakes. Proceed carefully before signing a purchase contract and closing the sale. This is a general information; pamphlet. You should consult with an attorney before making any decisions.