With interest rates at an all-time low, it may be the ideal time to purchase a house if you’ve been thinking about it. In fact, statistics show that there was a 27% increase in single-family homes this year — and the Massachusetts residential real estate market doesn’t seem to be slowing down any time soon, despite COVID-19.
If you’re a new home buyer looking to take advantage of the historic mortgage rates, you should have a basic understanding of what to expect during the closing process. The following are some of the steps associated with it:
Signing the Purchase and Sale Agreement
Once the seller accepts your offer, there are a few more phases until you can get to the closing table. The next steps in the process involve a thorough contract review, scheduling any inspections necessary, negotiating the contract’s terms, and attending the closing itself.
The contract — also called a Purchase and Sale Agreement — is one of the most important documents in any real estate transaction. It sets forth the obligations of both parties and generally includes provisions such as:
- Description of the property
- The purchase price
- The broker’s fee
- The closing date
- A mortgage contingency clause
- Items specific to the house included in the sale
- The seller’s responsibilities up to closing
- Lead paint disclosure
The contract can also include specific clauses concerning repairs that need to be made before the closing, and any other terms specific to the parties or property.
The Purchase and Sale Agreement is binding under Massachusetts law once it is executed by the buyer and seller. It’s critical to have an attorney review the document to ensure your interests are protected before you sign it.
The Closing and Required Paperwork
Once negotiations have concluded, and the contract has been signed, the actual closing is the last step in a residential real estate transaction. Before the closing takes place, the buyer should conduct a final walk-through of the property to confirm it’s in good condition. If there’s a defect that wasn’t expected, the problem needs to be addressed prior to signing the closing documents.
Additionally, if the title report comes back with any liens or judgments against the property — or it reveals delinquent property taxes — the contract can be renegotiated or canceled.
There are a number of documents that must be signed at the closing, including the mortgage and promissory note, the HUD-1 Settlement Statement, the closing disclosure, the Truth-in-Lending Statement, the payoff letter, loan documents, title documents, safety disclosures, escrow documents, and others. The closing paperwork can be overwhelming and confusing — an attorney can walk you through each document to explain what it is and make sure you understand what you’re signing.
Once you’ve signed the closing documents and the closing costs are paid, you can officially take possession of the property.
These are just a few basic aspects associated with the residential closing process to be aware of — an experienced real estate attorney can guide you through your real estate transaction from the initial offer through closing to protect your property rights and financial interests.
Continental Law Group is committed to providing clients with superior legal representation for complex and routine residential real estate transactions in Massachusetts and New Hampshire. Based on a modern business model, CLG has offices located in Boston, Salem, MA, and Portsmouth, NH. Call (617) 616-8210 to learn more about CLG’s residential real estate practice and other legal services.