First-Time Homebuyer Tips
Thinking of buying your first home? Keep reading for helpful information.
Before any potential buyer begins to seriously consider buying a property, they must make sure that they are financially capable of purchasing a piece of real estate. First and foremost, the buyer should get all of their personal documents in order. Documents such as pay stubs and tax returns will be needed throughout the process, especially with a mortgage. Second, the buyer should calculate potential monthly housing costs and determine how that fits into their overall budget. The formula should include mortgage payments, insurance costs, and taxes. This will give the buyer a better idea of what type of property they can afford. It is also important to note when calculating costs that there will be additional closing costs that buyers incur in every transaction. Third, the buyer should contact a realtor or someone who knows the local housing market to ensure that they get a good deal by considering the market and comparable properties. Fourth, do your homework on your mortgage, check various lenders to get the best rates. The buyer may qualify for a first-time homebuyer mortgage program through New York State’s SONYMA agency. These mortgage plans offer competitive interest rates, low down payments, no prepayment penalties, and down payment assistance. Preapproval can be a bargaining strength, but ensure that the lock-in date exceeds the closing date by at least a week to prevent the rate from expiring if there is a closing issue.
When You Have Found the Right Property
After the buyer has found the right property, approached the seller, and came to a tentative agreement, it is time to get a real estate attorney involved. The attorney will review the contract, ensure that title documents are in order, and work with the buyer’s lender to provide documents that the lender requires. The buyer must understand the terms and conditions of the contract and all the special circumstances or side agreements that are covered in the contract. Although the attorney will review the contract, it is unlikely that the attorney will ever be on-premises, so it would be impossible for them to make provisions. An open line of communication between buyer and their attorney can significantly reduce the possibility that an issue will be overlooked. Buyer has the right to a final inspection of the premises just prior to closing, so any remaining issues can be identified at that time. The final inspection is especially important because once the buyer closes on the property; the seller is generally not liable for any defective conditions that surface after closing (more on that later).
While buyers may be ready to move in, deals can be delayed or even canceled sometimes due to an issue that comes up at closing. It is important to be aware of the plethora of issues that can disrupt closing. For example, all checks utilized at closing must be from readily available funds, meaning certified funds or bank drafts, NOT personal checks. It is often the case that due to the flexible nature of real estate transactions, a buyer will not know the exact amount they must bring to closing until a few days before. A buyer must also have an original insurance binder and paid receipt that meets mortgage commitment requirements or the lender may cancel the closing. Transfer of utilities and keys is usually done through the realtor although parties sometimes do it themselves.
It is always a good idea for the buyer to purchase title insurance so that they have coverage protecting their ownership interest in the property. The title insurance you pay through the lender only protects the lender’s interest in the property. Although the attorneys examine title, title insurance protects the buyer from pitfalls that cannot be discovered by an attorney. The cost is usually about .075% of the loan amount. If an issue with the newly-purchased property arises post-closing and there is evidence that the seller hid or misrepresented the issue, it is essential that you contact an attorney immediately so you can discuss a potential timely claim against the seller.
For more information, listen to our podcast episode about first-time homebuyer tips, too!
If you have any questions about the above material or wish to speak to an attorney, please contact HoganWillig at 716-636-7600. HoganWillig is located at 2410 North Forest Road in Amherst, New York 14068, with additional offices in Buffalo, Lancaster, Lockport, and Ellicottville.