Do’s and Don’ts for Home Buyers

...........Home buyers make perhaps the most expensive and significant investment of their lifetime when they purchase a home. The average agreement of sale is so lengthy and complicated that many buyers sign without reading the entire agreement. Some home buyers are given as many as twenty to forty lengthy documents to sign at the final meeting or “closing” when they complete their purchase of their new home.

            How can new home buyer’s protect their interests? First, and most important, home buyers should take the time to actually read and be sure they understand their entire agreement of sale. Special attention should be paid to the mortgage contingency clause—a clause that excuses the buyer from the obligation to buy the property unless the buyer can secure mortgage financing. The mortgage contingency clause can include an specific interest rate or other mortgage terms, protecting the buyer from having to close the deal unless he or she secures truly favorable mortgage financing. Also deserving of special attention are the agreement’s terms making the sale contingent on the buyer’s sale of his or her current home. Finally, tightly drafted contingency clauses on the property’s passing various inspections and tests always should be included.

            Wise buyers secure professional surveys either from their sellers or by hiring a surveyor if no current survey map exists. Title insurance is required by mortgage lenders; but even without a mortgage, all buyers should be sure to buy title insurance. The title insurance is issued after a title search—such searches can reveal liens, easements, judgments and restrictive covenants that can significantly affect a property’s value or permitted use. Wise buyers also conduct a final walk-through on the day of closing to be sure all requested repairs are complete and that the property is in the expected condition and ready for occupancy.

            At closing, sellers deliver their deed and buyers sign mortgage documents and authorize the disbursement of funds to finalize the sale. The mortgage lender and the closing agent are responsible to prepare all the necessary documents. It is reasonable for buyers to request the opportunity to review the documents, or to have their attorney review them, prior to closing. It is also wise to review the final closing costs with the closing agent several days in advance. Finalized interim mortgage interest and property taxes may be different from the mortgage company’s initial projections. To avoid surprises at closing, buyers should work with their attorney or closing agent to determine all the final costs in advance.

            Most closing agents and mortgage lenders require that buyers bring photo identification to closing. At closing, buyers must also produce documentation that their homeowner’s insurance is in place.

            After closing, buyers should be sure to review their settlement statement with their accountant. In most cases, loan origination fees and points are deductible, as are property taxes and legal fees associated with the home purchase.

Stroudsburg Attorney Jane Roach has twenty five years of experience and provides representation in real estate transactions, title insurance and complex real estate litigation. For more information about Jane Roach, contact her at 470.421.7009 or visit her website at www.jroachlaw.com.