Real Estate ABCs

It’s back to school time, so I thought we would get in on the fun and do an ABCs of real estate series! Stay tuned over the next few months, as we complete the alphabet. This is specific to the NY/Long Island/NYC area and terminology may be different in other parts of the country.

?A is for Appraisal?

This is the value that the bank assigns to your home. In this market, I have seen some deals where the purchaser waives the appraisal, meaning if the house does not appraise for the purchase price, the purchaser still has to purchase the house. If this is what it takes for you to get the house that you really want, language can be crafted by your attorney to protect you to the best of their ability.

B is for Binder

Also known as a sales agreement. This is the initial offer that the buyer puts in and contains all the proposed terms of the deal, including the balance at closing. Remember, the amount that you are putting “down” in total is not necessarily the amount that is the down payment on contract. Some real estate agents do not make the distinction. So, if you really only have $20,000 to put on contract, but plan on only getting an 80% mortgage, make sure that the binder specifically states this. If?you have any concerns, give your attorney a call before the offer is submitted.???

C is for Credit Repair

Having a great credit score is great when applying for a loan. We all know this. But it's not all about the score, there can be other issues in your report which might make you less than desirable in the loan underwriter’s eyes. Know your credit report before you start looking. A credit repair company can do a “soft pull” and give you an honest opinion as to helping you raise the score and make your report look better. And, if there are any errors that the credit companies fail, or refuse to remedy, there might even be statutory compensation.??

D is for Deed

The deed is the document which transfers ownership of the home. The seller signs it at closing and it gets recorded with the County Clerk to notify the world of the new owner. It is important to see a copy of the deed prior to preparing the contract so that the parties know who is on title. For example, a couple might want to sell their house and forget that they actually put their property into the name of a trust. The Trustee needs to sign the contract in that case. If you do not have your deed, you can get it from the County Clerk for a very modest (under $10) fee.?

E is for Expenses

Seller expenses generally include transfer tax (NY State and NY City), payoff of the mortgage, mortgage satisfaction recording fee, real estate commission, title closer pick up fee and attorney fee.?

Buyer expenses generally include loan charges, mortgage taxes, tax adjustments, title charges, recording fees, title closer fee, attorney fee, mansion tax (only applies to sales over a million dollars) and the Peconic Bay tax, if the house is in that region.

F is for Flipping

This is when an investor purchases a home, renovates it and sells it for a profit. Be careful when you are looking to purchase a “flip” house. Not all investors do a great job with their renovations, so make sure you have a good home inspector.

G is for Good Faith Estimate

This is now known as your loan disclosure. After you apply for a loan, the lender has to give you a loan estimate which breaks down the amount of your closing costs. This does not have to be?exact, but is as accurate as possible. This way, you are aware of approximately how much this loan is going to cost you.??

H is for Homebuyers (First Time)

Homebuyers buying their first home can apply for a Federal Housing Administration (FHA) loan. The United States Department of Housing and Urban Development (HUD) is insuring the loan, which allows for less money to put down, lower closing costs, etc. A Mortgage Insurance Premium (MIP) will be added to the mortgage payment amount for insurance, since borrowers could come with a higher-risk of default.?

This series continues in the coming months and we will cover more real estate terminology to help you be as informed and prepared as possible when you go into your next buying or selling experience. If you'd like more information on Sugarman Law, visit our website at?www.sugarmanlaw.com?

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