First-time homebuyers are anxious to start life in their new home. After all, navigating the New York City housing market is not easy, particularly in a seller’s market. The average time to settle on a New York City real estate transaction is 60 to 90 days. In addition, certain things must happen at a real estate closing for you to close. Each closing is different, and unique circumstances can alter the time frame. However, we provide a roadmap for homebuyers to know when they officially become homeowners after reaching an accepted offer with the seller.
What Happens at a Real Estate Closing in NYC?What Happens at a Real Estate Closing in NYC?
After months of searching and days of negotiating, it’s finally time to close on your New York City apartment. At this point, you’ve found your ideal home, assembled a board package (if purchasing a resale condo or co-op), passed the board’s interview in case of a coop, and you feel good about your purchase. Although you might think that the real estate closing consists of wrapping up a few details, there are still a few hurdles to overcome.
You should also have completed the final walk-through with your agent; if you haven’t done so yet, then don’t move forward with closing the sale until you’ve done so. Your agent must confirm that everything is as it should be and that your new apartment doesn’t have any huge problems that have previously gone unnoticed.
During the ClosingDuring the Closing
In reality, two closings may be happening at this stage; closing for sale and possibly closing your loan on the mortgage. This closing location could be at a few different places; the managing agent’s office, an attorney’s office, a broker’s office, or another area where the sale is officially recorded. During the closing, you, as the buyer, will (of course) be giving the agreed-upon amount of money to the seller. You receive a deed (for a condo) or a proprietary lease (for a co-op).
You (the buyer) and the seller will usually attend, and both sets of attorneys. Additionally, a closing agent, your real estate agents, and maybe a mortgage company representative will be there. Some insurance deals also might have to happen at this stage—be sure you’ve gone over all these things with your attorney beforehand.
Your Closing DocumentsYour Closing Documents
- The Real Estate Settlement Procedures Act (RESPA) statement itemizes all closing costs, also called the HUD-1 closing statement. You’ll need this document for income tax purposes and when you sell your property.
- The Truth in Lending Statement spells out the terms of your mortgage loan.
- The mortgage and the note, two separate documents, explain your mortgage obligation’s legal terms and agreed-upon repayment terms.
- Property Deed; transfers the ownership to you.
- Affidavits affirm various statements made by either party. For example, the sellers often sign an affidavit stating they have not incurred any property liens.
- Riders and Amendments; affect your rights. For example, a rider may outline the condo association’s rules and restrictions if you buy a condo.
- Home Insurance policies; provide a record and proof of your coverage.
Understanding Closing CostsUnderstanding Closing Costs
You will need to come with checks in hand when attending the closing. Your attorney will guide you on how much each check amount should be made payable based on your contract of sale. If you’re moving into a condo or co-op, you’ll have to pay for these closing costs.
- Attorney fees
- Filing fees
- Flip tax (in some cases when purchasing a co-op)
- Maintenance adjustment and appraisal (depending on the specific circumstances)
Assuming you’re financing, you’ll also need to have an Aztech recognition agreement, and you’ll have to pay a loan origination fee and a UCC-1 filing fee. You may even need to pay out for prepaid mortgage interest. Your attorney will provide you with a closing statement that itemizes the costs you and the seller paid.
Real Estate Closing StatementReal Estate Closing Statement
The closing statement will also specify the transaction’s various “debits and credits” of the buyer and seller. All of these will need to be paid; via certified checks. The real property transfer tax (which the seller usually pays) will also be given at this transaction stage. Finally, if the property in question costs more than one million dollars, you’ll also have to pay a “mansion tax” that comes out to 1 percent of the property’s purchase price.
Take care that you have all the correct checks lined up and know all the documents mean. Assuming you’re on the same page as the seller, though, the process should more or less be painless.
When FinancingWhen Financing
If buying with a mortgage, your lender must prepare a reasonable faith estimate of all settlement costs before the closing, but the title company or attorney calculates the exact amount you will be required to bring to close on your new home. Be sure to get a cashier’s check for your share of the costs a few days before the settlement date.
Since these costs are paid monthly or annually, you may pay for some services used by the seller before they move. Similarly, some expenses are paid in advance of services used. Proration allows the buyer and the seller to balance these accounts so that each only pays for their services.
What are the Closing Costs?What are the Closing Costs?
To estimate your closing costs when purchasing a Condo or Co-op property, visit our Closing Costs Calculator for Buyers.
How Long Does a Real Estate Closing Take?How Long Does a Real Estate Closing Take?
Co-ops and CondosCo-ops and Condos
Naturally, co-ops typically have a longer closing time than other New York City properties, including condos. On top of the usual steps, including a home inspection, title search, and your lawyer’s due diligence, a buyer needs a condo or co-ops board approval. Your lawyer needs to conduct due diligence on the building, too. It would help if you prepared for the extra time these steps take.
Generally, a condo sale takes a shorter period to close. In addition, if you are paying cash, you do not have to wait for the bank to approve your mortgage, further shortening the time.
Hurdles to ClosingHurdles to Closing
There are typical steps needed after the seller accepts your offer. These usually go smoothly, but any delay pushes back your real estate closing date.
The real estate closing occurs once terms, sales price, contract signed, and check, are sent to your real estate attorney. The contract is then binding once the seller countersigns the contract. You control the first two items, but there are cases where the seller drags their feet. It should take one or two business days. If it takes longer, you and your buyer’s agent must question the seller and agent since they could use your offer as a bargaining chip to receive a higher bid.
Once the seller signs the offer, the listing is “in a contract” Several things happen, including an appraisal, which you need for your mortgage. Such can delay your closing if the home appraisal falls short. If this happens, you need to provide additional funds or renegotiate a lower price. Assuming this goes smoothly, the bank grants a commitment letter. At this time, you find out your interest rate, which you can lock in for a certain period, typically 60 or 90 days.
Due DiligenceDue Diligence
We strongly advise a home inspection. Significant repairs could lead to a delay in your closing. If there are any negative surprises, you may want to renegotiate with the seller to pay a portion. During the due diligence period, your lawyer will also order a title search, read the board minutes, and review the offering plan and the building’s financials.
If this is a co-op, you must contend with the board interview and approval.
Final ThoughtsFinal Thoughts
There are many documents to sign on your real estate closing day. Under the Consumer Financial Protection Bureau (CFPB) “Know before you owe” rule, you will receive the Closing Disclosure three business days before your closing date, allowing you to review the mortgage terms and costs. Additionally, your attorney should explain all the documents as they present them to you.
Typically, the closing takes two to three hours, and you receive the keys to your new apartment at the end.
What is a Closing Statement?What is a Closing Statement?
So you’ve at last secured the closing date on your new apartment in NYC. Pat yourself on the back. You’re at the finish line. However, some things remain, such as the final walk-through of the condo or co-op apartment and the closing statement. If this is your first home purchase, you may not be familiar with the last one. Read on to find out what it is and why it’s necessary.
A closing statement merely summarizes the sale transaction, which you’ll keep for your records. It’s written up by your real estate attorney in spreadsheet form and lists your closing costs for the purchase. This is an essential document because you won’t have a specific figure for your closing costs until it’s written up. The problem with the closing cost figures provided by your buyer’s agent and the lender is that they’re only estimates. Until your attorney has prepared the closing statement, you won’t have an exact figure on your final costs.
On closing day, you will exchange checks, and it can get a bit confusing. The closing statement organizes everything to know where the money is going.
What does a real estate closing statement contain?What does a real estate closing statement contain?
At its most basic, a closing statement will include the following:
- The names of the seller and purchaser
- The specific closing date
- The address of the property
- The closing location
Since most closings are postponed a day or two, the closing statement must give a specific date. On the closing day, some people will be present to finalize everything. Expect to see the following people:
- The purchaser’s attorney
- The seller’s attorney
- The purchaser’s lenders attorney
- The two brokers (usually, but not always)
- The title company
Once all are together, it’s time to exchange checks.
Checks to bring on closing dayChecks to bring on closing day
Before closing day, confirm with your attorney what checks you need to pay and who they need to be, made payable. These should be bank checks, also known as certified cashier checks. These are required because they won’t bounce as the funds are withdrawn at issue, unlike personal checks. You can only pick these up directly from your bank.
Also, bring your checkbook in case there are any unforeseen expenses. For example, it won’t be ideal if your closing is delayed because you are short $100.
What to do if you’re financingWhat to do if you’re financing
If you are receiving funding for your purchase, there’s a good chance that you won’t need to bring any checks at all. The case is if other parties already account for all your proceeds. For instance, your layer will have the down payment in escrow, and your mortgage lender will be there for the remainder of the funds. Most familiar with buyers who are receiving gift funds or other wire transfers. Just remember to confirm with your real estate attorney first if this is the case. You can check this with them once you’ve received your closing statement.
The turning point in any real estate closing will be when you finally receive the keys to your new property. Although you’ll likely change all the locks right away, the symbolic significance will still offer closure to the process. The deed and mortgage will then be recorded in your attorneys’ public records; the purchase of your new home will now be closed and registered officially.