(Revised by Mary Stetson 2016)
Congratulations, you are on your way to owning your very own home! Follow these suggestions (and your realtor’s advice) so that escrow and settlement with go as smooth as possible.
You will be asked for a down payment on the home you are purchasing. Typically, the downpayment is 20% with 10% being paid on contract and the remaining 20% being paid at closing. Smaller down payments are possible based on your mortgage choice. Or, of course, you may pay 100% cash.
During this period of purchasing your home, in Westchester County, the seller’s attorney acts as the escrow agent. They hold your deposit check and coordinate much of the activity that goes on until closing when you get the deed and the keys. In other areas, you are hire an escrow or settlement company to act as an independent third party. Make sure that there are sufficient funds in your account to cover your deposit check, as it will be cashed. Assuming the sale goes through, this money will be applied to the purchase price of the home. If for any reason the sale is not consummated, you may be entitled to receive all of your deposit back, less standard cancellation fees. In certain instances, the seller may be able to retain this money as liquidated damages. Prior to executing a purchase contract, it would be wise to speak with your attorney regarding whether or not it is your best interest to have a liquidated damages clause as part of the contract. The period that you are “in escrow” is often 30-60 days. A cash deal could close in a 10 days. During this time, each item specified in the contract must be completed satisfactorily. The signed contract states the closing date and the contingencies. Note that in NY state, the closing date is can easily flex up to 30 days. Each contract is different, but most include the following:
Inspection contingency: this should be completed as soon as possible after the contract to purchase is signed as unsatisfactory results of the inspection may mean that you will want to cancel the contract.
Financing contingency: once the contract is signed, you have a period of time to secure funding. If, for any reason, you are unable to secure funding during the period of time granted to you by the contract (and the seller will not provide a written extension of time), you must decide whether you want to remove the contingency and take your chances on getting a loan. You may choose to cancel the purchase contract.
A requirement that the seller must provide marketable title.
With an attorney or title officer, review the title report. The title must be “clear” to ensure that you do not have legal issues regarding your ownership. Check into local and state ordinances regarding property transfer and make sure that you and/or the seller have complied with them. For instance, Mamaroneck requires a plumbing discharge certificate. Secure homeowner’s insurance. Schedule your movers, but do not specify the exact moving day until your attorney confirms a closing date. The closing date can not be contemplated until after your mortgage bank give you a ‘clear to close’. Also, TRID requires the closing statement, which details all moneys that will trade hands, to be completed three days prior to closing. Contact local utility companies to schedule to have service turned on, on the closing date. Schedule the final walk-through inspection. At this time, you should make sure that the property is exactly as the contract says it should be. What you thought to be a “permanently attached” chandelier that would come with the property might have been removed by the seller and replaced with a different fixture entirely.
You’ve made it! Once the sale has closed, you’re the proud owner of a new home. Congratulations!