We recognize that buying a home -- one of the most important events of your life -- is also one of the most confusing. We have prepared this outline in the hopes of explaining who’s who in the home buying process, what issues may arise, and what you can do to make the process work for you. We have also included a section explaining our role and how we can help in the purchase of your new house.

FIVE STEPS TO BUYING YOUR NEW HOME

Step I: Negotiating the Deal

By the time you come to us, you have already worked with a real estate broker and signed an offer to buy a house. This offer may include contingencies that will allow you to get your deposit back upon the occurrence of specific events:

a clause that makes the sale contingent on selling your existing house;

a clause that makes the sale contingent on getting financing;

a clause that makes the sale contingent on a home inspection contingency and a final walk through 24 hours prior to closing;

a clause that specifically includes or excludes items of personal property such as a lawn mower or dishwasher.

There may be other requirements that are important to you and that you and the Realtor should have included in the offer. The purchase and sales contract that we will draft for you will not introduce new terms into the deal. Rather it is based solely on the terms you have already agreed to in the offer. It will protect only those rights that you have negotiated and agreed upon. Once we have drafted the contract we will go over it with you before you sign it.

Step II: Choosing a Lender

You will probably finance through a mortgage broker, or a local bank. Whichever you choose, avoid the tendency to simply go with the lender who offers the lowest interest rate. The cost of your financing is a function of two equally important factors: interest rates and fees. Brokers are more likely to offer a lower interest rate than a bank, but also more likely to charge a higher fee. Keep in mind that a slightly better interest rate may come at the price of a $4,000.oo or higher brokerage fee, a fee more than offsets the benefits of the lower rate. Be sure you know exactly what fees you will be paying before you come to closing.

At the closing we will explain the documents your lender has prepared, and go over the terms and fees that they include. But we have no control over what those terms and fees are. You must be sure you have clarified all of the terms with your lender before you get here. Don’t be one of those buyers who, on the day of closing, is stuck between backing out of the deal and losing the deposit, or swallowing a huge, and unexpected, fee.

Finally, if you are trying to choose between two lenders with equally appealing terms, you should consider whether one of them is local. If there is a problem later on, it is easier to deal face to face with someone you know than with a voice on a telephone a thousand miles away.

Step III: Mortgage Approval

This is a two-step concept that buyers often misunderstand. First, a lender pre-qualifies a buyer with a mortgage commitment. This means that based on some preliminary information you have given to a lender, that lender is reasonably sure he will able to lend you a certain amount of money. Many buyers believe that once they have this mortgage commitment, they have met the mortgage contingency in the purchase and sale agreement. They haven’t. A buyer only secures the final approval necessary to meet the contingency once the lender agrees to give a certain sum for a particular piece of property with all conditions of the processing, appraisal and underwriting completed.

Step IV: Mortgage Contingency Date

You must be sure to get your final approval by the date agreed on in the purchase and sale contract. If you miss the date and your financing falls through, you will lose your deposit. It is one of the most important dates for you to remember. If you can’t get final approval by that date, we can probably get an extension, but you must notify us as soon as you know you need more time.

Step V: Closing

This is the date by which you are supposed to close on the transaction. We need three to five weeks to do our job. It takes at least three to four weeks to secure the documents needed to close. Once all documents are in hand the lender usually requires three to five days to ready and deliver its papers to our office for signing. Often the closing date agreed to at the time of offer is less than the four weeks it takes to prepare for closing. If this is the case, the closing date is probably unrealistic and you should be prepared to wait at least a week or two beyond that.

If you are buying a new house from a builder, you can be almost assured that the delivery date in the purchase and sale contact is not realistic. Bad weather, unreliable subcontractors and slow suppliers can delay construction.

To avoid this, you can negotiate into your offer certain terms:

a clause stating “time is of the essence” forces the developer to finish on time or to be in breach of contract and liable for your damages;

a penalty clause whereby the developer is required to pay a certain amount each day after the closing date;

a clause whereby the developer will pay the cost of your housing and any rate increase on your mortgage for failure to deliver.

In the current real estate market, however, it is unlikely you will get a builder to agree to these terms. If you try, the builder may simply sell the house to a buyer willing to forego such protection. If you have already agreed to a contract without these terms, you should plan on closing one to four weeks beyond the date in the contract.

OUR LEGAL FEE AND WHAT IT COVERS

Our flat fee is based on the amount of work normally required for a real estate closing. Keep in mind that the focus of our job is to draft, secure, review and file the necessary documents and that only you can negotiate that actual terms of your purchase and your financing. The fee includes:

Documentation Preparation
Order Title
Order municipal lien certificate
Order tape survey

Consultation
Review terms and purchase and sale contract and address any concerns questions.
Review title, lien certificate and tape survey.

Pre-closing
Review title, determine any defects and, if significant, advise on plan and cost to cure.
Review lien certificate to insure no outstanding taxes are due.
Review tape survey to insure there are no flood plain or other environmental issues.

Closing
Review the HUD financial statement to insure that you get credit for fuel, taxes and other expenses you are entitled to, and to make sure that all of the financial terms are what you agreed to.
If also acting as lender attorney, collect and prepare lender documents including mortgage and note, and supervise signing of documents.

Post-closing
Deliver and file CML, deed and mortgage to Registry of Deeds.
If also acting as lender attorney, pay off all encumbrances on property.
Obtain discharges and file at registry.

Our fee is calculated to give you the best possible service for the task of getting you from signing the offer to walking into your new home. Again, this fee does not encompass negotiating the terms of your offer, nor does it include the job finding a lender and settling on financing terms. If major title or other issues arise, the fee does not cover the cost of curing them. But we will work hard to fix any problems that can be addressed quickly and will only charge an additional fee if the work extends significantly beyond the scope of a typical closing.

We have prepared this instruction sheet to best serve your needs and to insure that you understand that, while the job of buying your new house may appear daunting at times, we are here to help you through it.