WHY A PROPERTY LAWYER IS SO ESSENTIAL WHEN CLOSING ON A HOME?

WHY A PROPERTY LAWYER IS SO ESSENTIAL WHEN CLOSING ON A HOME?

IS HIRING A PROPERTY LAWYER NECESSARY?

A lot of people wonder why a property lawyer is necessary when selling or purchasing a house. The closing and contract process is tedious and lengthy. A property lawyer that is well-versed in property practice can simplify and expedite the experience. In fact, Rozhik Law Firm PLLC navigates clients through each stage of the closing process.

Besides the seller’s and buyer’s attorneys, a property lawyer that represents the lender will probably be present during the closing process, as will a realtor. For the most part, a title closer should clear any final objections with regards to title insurance. They will then establish payoff figures before preparing documentation to be filed. In the meantime, the seller’s and buyer’s property lawyer will establish if any credits are due to involved parties. From there, the attorney representing the lender will put together a customized closing statement that covers closing costs. They’ll also release funds for the purchaser. From there, the property lawyer representing the buyer will explain what the mortgage documentation covers as the buyer is executing them. The property lawyer representing the seller will put together the property transfer tax and deed documents.

Rozhik Law Firm PLLC has extensive experience when it comes to representing both sellers and buyers during property closings. Our firm’s legal experts will work alongside you from start to finish of the entire closing process. Each property lawyer at our firm can explain each stage of the process so that you understand exactly what is happening. Our firm will work diligently to make sure that the transaction gets completed as efficiently and quickly as possible. This will save you a lot of money and time.

RESIDENTIAL PROPERTY LAWYER FOR BUYERS

• Explain both the mortgage commitment and property contract to a buyer.
• Review the property contract and conduct negotiations accordingly.
• Resolve any problems (including matters pertaining to termite damage, repair, etc.) before closing.
• Speak with the attorney representing the seller, the mortgage company, and the title company.
• Prepare for the closing, and acquire any title work necessary before doing so.
• Title commitment and mortgage commitment review.
• Representation during closing.

House Closing: What You Should Expect

If closing on a home is something you are close to doing, congratulations! It probably was not easy to score a deal for a property you had your eye on in this market. Chances are pretty good that you had to put in a lot of work in order to secure the offer.

After going through a bunch of home listings, making sure that you had a competitive offer, and going from one financing hoop after another, the offer you made finally got accepted. You got the house you wanted in the end.

The keys are not quite yours yet, though, so you need to remain vigilant! You need to know specifically what kinds of things to expect before closing on the house.

Closing: What Is It?

The last step involved with the property transaction is closing. The closing date will be the specific day that you are officially deemed a homeowner.

As part of the contract negotiations, the buyer (you) will establish a specific closing date with the seller. This date will be printed on the contract (purchase agreement). Once your offer is accepted by the seller, money will exchange hands in order for the contract to be secured. You need to be patient before the closing date comes along.

While the seller and the buyer might have agreed to a specific closing date, the real estate agents will be working with the title agency and lender. They will put together a timeline to execute their part of this deal correctly. This could end up postponing the closing date for weeks (if not months) after the offer is accepted formally.

Preparing for a House Closing

There will be some things you’ll have to do on your end before closing is official, including the following:

Put Together a Team

As the closing date approaches, you do not want anything getting screwed up at the last second. Make sure that the team facilitating the process for you is solid. That starts with a realtor. You will need to work with a professional that understands the local market. That is because nobody likes last-minute surprises.

A real estate agent can network with team members essential to the process, including:

• Title insurance agents.
• Home inspectors.
• Mortgage professionals.
• Escrow officers.

Put Together a Closing Checklist and Complete It

Once you have put together a team of professionals, they will start reviewing your contract before preparing for certain closing contingencies. These can be described as conditions that are in your contract – ones that need to be met well before the transaction becomes binding.

Some of these contingencies might include the following:

• Home inspection – keep yourself protected from bad deals – utilize the services of a professional home inspector. These experts will ensure that no hidden faults are apparent that could empty your bank account, post-transaction.
• Loan documentation – if a loan was something you received pre-approval for, then there will still be work needed on your end for final financing approval. You can prepare yourself accordingly by gathering all of the documentation that you need. That will include income statements (a W-2 form, pay stubs), identification, insurance information, asset statements (investments, bank accounts), and one copy of your contract. If applicable, you will also need an official divorce decree (alimony information, child support) and bankruptcy documents. For a more comprehensive checklist and/or financing details, a qualified mortgage lender should be contacted.
• Appraisal – the mortgage lender representing you will likely require this, as they don’t want to lend you an amount greater than the home’s actual value. A realtor can have an appraiser estimate the house’s existing market value. Appraisal fees will likely be factored into the closing costs.
• Homeowners insurance – this kind of insurance will be mandatory since it covers expenses associated with rebuilding, replacing, or repairing your home (or the items inside the home) if it’s either destroyed or damaged. These policies will give you liability coverage, protecting you from accidents on your property or in it. Homeowners insurance usually is mandated by lenders, and tends to come with the mortgage payments you make each month. The insurance agent that you choose should have the ability to get you decent coverage at a fair rate.
• Final walk-through – this is not the same thing as an inspection. Your realtor will schedule a final walk-through, typically 24 hours ahead of closing. When this happens, all of the seller’s possessions must be cleared out (aside from anything that you have agreed to leave behind). Ensure the home’s condition matches what was originally agreed upon in the contract. That is what the final walk-through is about. Test out appliances, doors, windows, toilets, light fixtures, and other relevant things. Don’t rush through this process – any unexpected surprises must be brought to the realtor’s attention right away.

Closing contingencies can be described as conditions that are listed in a contract – ones that need to be adhered to before the transaction becomes binding.

If the property terms above are somewhat confusing, speak to your real estate agent about them. Do not pay for or sign anything that you don’t fully understand.

As Far As Selling a House Is Concerned, What Is the Length of Time Necessary to Close?

On average, it usually takes about 41 days or so for a house to close.

Why is this process so time-consuming? It turns out that approximately 32% of transactions end up going through some kind of hang up or delay before closing.

46% of these delays happen because of financing problems. In other words, these postponements transpire because buyers are taking on more credit ahead of the closing date.

With that said, if you had stuck to the teaching principles Dave taught you about purchasing a house, then you will have already become debt-free. You’ll also have between 3 and 6 months’ worth of expenses stored in an emergency fund.

Adding more debt to your existing mortgage is unnecessary. Doing so will negatively impact your approval rate, as far as getting a mortgage is concerned. Asking for more money brings down your personal credit score. That means the lender may need to change the mortgage agreement. Problems will ensue.

You may also bring upon a delay if you are not completely honest with the lender with regards to payment obligations (such as child support). Dishonesty or concealment could modify the debt-to-income ratio, resulting in more recalculations.

Closing Issues That Could Stimulate Delays

It would do you well to be prepared for potential delays. Such problems could come about after an offer is made, right up to the closing day.

Appraisal Issues

The official appraisal you get may end up being lower than you thought it would be. Appraisers utilize comparable property sales in order to calculate the value of a home. In certain areas, housing prices are going up so quickly that comparable sales have not yet caught up. If there are features that are uncommon in comparison to other homes in the neighborhood, you might also get a significantly low appraisal for the house.

For the most part, though, low appraisals are essentially warning signs that you are paying a lot more than you should be. Regardless of the reason, a lender won’t be able to approve loan amounts for anything higher than the home’s appraised value. If the home does end up getting a significantly low appraisal, then there are several options at your disposal:

• Consider asking the seller if they are willing to lower the asking price. There might be a contract contingency that safeguards you from purchasing property for significantly higher than an appraised value.
• Contest the appraisal and/or ask for another one if incorrect information is evident. Speak with your realtor about this.
• Pay the seller with cash if they are willing to compromise.
• Have the contract canceled.

If you opt to pay the seller with cash, do so with caution. Using cash to compensate for low appraisals will mean you will probably reside in the property for much longer in order to recover its value. If you’re not able to negotiate a more favorable deal, then it may be prudent to simply let go of the home.

Loan Issues

If an offer was made on the house before you received approval for the loan, the bank will start combing through your finances for the sake of determining how much money they are open to lending you. This can either go great or terribly.

If your offer comes with a 10% down payment or higher, then you are likely to receive approval for a fixed-rate, 15-year mortgage – one that comes with a 25% cap of take-home income from you, as far as payments go. In that regard, you’ll have the ability to pay your mortgage off within a fairly reasonable timeframe. Other loan options are not recommended.

A lot of buyers end up becoming smitten with houses that they cannot afford. Lenders will help such people the home of their dreams, but do so with questionable financing options (such as piggyback loans or mortgages with adjustable rates). Even a basic 3-decade mortgage with a fixed rate will end up costing you thousands of dollars worth of interest (and lock you up for decades in debt)!

Ideally, you shouldn’t just pre-qualify for your mortgage – you should be pre-approved for it as well before you start looking at potential homes. In doing so, you will know what specific price range look within. That will stop you from making offers on properties that are out of your price range.

Home Inspection Issues

Just about all home inspections – even ones conducted on new houses – will bring some issues to light. Some of them are fairly minor and are easily resolvable or ignorable. They can be used as part of the negotiation process.

With that said, certain problems – like water damage or insect infestations – should serve as warning signs that you shouldn’t ignore. For example, termites cause over $5 billion worth of property damage every year. The costs to repair that damage typically aren’t covered by the average homeowners’ insurance plan. In addition to repairs, an exterminator will need to be paid to get rid of the infestation. As an example, chemically exterminating a home that is 2500 ft.² big will cost anywhere between $1800 and $3100.

Water damage will set you back anywhere between $1069 and $4099. $2582 is what the overall national average happens to be. Further, if some kind of water leak is apparent and has lingered for a significant amount of time, it is possible that mold may have developed on the property. Mold remediation expenses will set you back anywhere from $1116 to $3364.

Foundation

Foundation issues and major plumbing or electrical problems can also be costly to fix. They can also be indicative of ongoing problems associated with the house. As great as the location may be or the perfect you think the house is, it would do you well to choose another option then become an owner of a property with expensive complications to rectify.

If you saw the home of your dreams in a neighborhood that you have never been in, you’ll need to think more objectively. Be sure that you are purchasing a property in a neighborhood of high quality before closing. Once the transaction closes, all sales are final. As such, you must be sure that no issues have been concealed before that. Go through the neighborhood during various times in the day and on different days. How comfortable to people seem when they are outside of their houses. Do you see children playing outside? Is construction happening nearby?

Expanding neighborhoods and new shopping centers are indicative of a community that is in good shape. Do your due diligence about schools nearby. Be sure that this place is where you want to remain in over a long-term period. Just because you’re getting a good deal for the place does not mean that the neighborhood is worth living in.

Walk-Through Issues

What if you found something that was damaged during your final walk-through. Suppose that you noticed the removal of something the seller said would stay. Dealing with issues like these could end up delaying the closing date.

Documentation Issues

On the day of closing, you will be adding your signature to a lot of paperwork (between 50 and 100 pages, to be specific). After all that waiting, it might be tempting to just rapidly sign each paper for the sake of bypassing all the legal jargon you don’t understand. This is something that you should not do, though. Each page should be read comprehensively. If something does not add up for you, don’t be discouraged from asking questions. Your realtor will navigate you through anything you don’t understand.

How Much Will Closing on a Home Cost?

The costs that come with closing are essentially the fees that independent parties charge whenever you make the purchase of the house official. Such expenses usually entail the bill for home inspections, homeowners insurance premiums, appraisal fees, credit report costs, property lawyer expenses, and more. A lot of these expenses will need to be paid before the day of closing (home inspection, earnest money).

You can expect to pay anywhere between 3% and 4% of your home’s purchase price, on average, as far as closing fees go. For instance, if the home has a cost of $300,000, then you could end up paying anywhere from $9000-$12,000 worth of closing costs.

Closing Cost Preparation

A few days ahead of closing time, the lender will send you an official Closing Disclosure. It’s a form that lists the loan’s final terms, including closing expenses and information about who receives and pays money, come closing time.

Go over each cost meticulously beforehand, then contrast them to your initial Loan Estimate. You received this form after applying for the loan. It shows you estimated interest rates, potential monthly payments, and closing cost totals for the loan. If there were any changes, ask why.

Go over the monthly mortgage payment amount so that you know that things were calculated properly and within your budget. The mortgage payment you make each month should not be greater than 25% of the income you take home each month.

What Should I Bring with Me on the Day of Closing?

To ensure that things run as they should, there are several things that you will have to bring along with you to the closing appointment. The mortgage loan officer and title company rep will likely offer you a checklist containing things that you will need, including the following:

• Cashier’s or certified check that’s made payable directly to either the closing company or title company. It will cover closing costs not subtracted from a sales price.
• Outstanding paperwork or documentation for either a mortgage loan officer or title company.
• Photo identification.

What Will Happen on the Day of Closing?

If you have brought everything with you that is necessary on the day of closing, then the only thing you’ll need to do to move forward from here is add your signature to relevant documentation! Here is what you can expect:

• You will pay any closing costs remaining, as outlined in the Closing Disclosure.
• Documentation will be signed by the seller in order to efficiently transfer ownership of the property to you.
• You will need to sign the following:
• A mortgage note that states your intention to have the loan repaid.
• A statement of settlement listing all expenses pertaining to the sale of the home.
• A deed of trust or mortgage that secures the actual mortgage note.
• A title company can then register the all-new deed over to you.

As simple as this sounds, expect to go through a lot of paperwork!

Where Will the Closing Appointment Transpire?

The closing appointment likely will happen in the escrowee’s office. This will likely be a title company – one that is legally securing property ownership for you.

Who Will Need to Attend the Closing Appointment?

This answer will depend on the area you reside in. People directly involved should be at the closing appointment, including the buyer (you), the seller, an attorney (who may also serve as a closing agent), the closing/escrow agent, a mortgage lender, the title company rep, and realtors. However, if the deed was pre-signed by the seller, and documentation has already been transferred, then they likely will not have to be present.

How Fast Can I Move Into My New Home After Closing?

It may be possible to move right into the new home right after closing. Exceptions may be made if a seller has requested to remain in the home for a specific period of time, post-closing (this tends to happen with rent-back agreements). The official moving-in date must be established and outlined in the final contract.

If you need a property lawyer to help you navigate this process, call Rozhik Law Firm.