While it is always advisable to work with an experienced real estate attorney when purchasing real estate to ensure that your rights are protected throughout the process, it may also be beneficial to familiarize yourself with the most common steps, terms, and documents involved in the closing of a real estate purchase. Learn more about closing a real estate purchase in this presentation.

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BBUUYYIINNGG AA HHOOMMEE
-STEPS INVOLVED IN
CLOSING THE DEAL
“While it is always advisable to work with an experienced real
estate attorney when purchasing real estate to ensure that
your rights are protected throughout the process, it may
also be beneficial to familiarize yourself with the most
common steps, terms, and documents involved in
the closing of a real estate purchase.”
Charles Curley
Pennsylvania Employment Attorney

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For many people,buying a home
remains part of the “AmericanDream.”
For a first time home buyer, however,
the process of buying a home can be a
bit intimidating, particularly the closing.
Unless you are fortunate enough to be
able to purchase a home with cash you
will have to qualify for a mortgage loan
in order to finance your home
purchase. The legalities involved in the
closing process,particularly when
financing is required, can be confusing
to even a veteran buyer. While it is
always advisable to work with an
experienced real estate attorney when
purchasing real estate to ensure that
your rights are protected throughoutthe process,it may also be beneficial to
familiarize yourself with the most commonsteps,terms, and documents involved
in the closing of a real estate purchase.
Pre-Approvalvs. Pre-Qualified – A Word aboutFinancing before You Get
Started
Because this is an area that tends to confuse buyers frequently, it warrants a
brief discussionbefore moving on to the closing. It makes sense to know if you
can get approved fora mortgage loan before looking at houses and, if so, for

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what amount. Toward that end, both “pre-approval” and “pre-qualification” are
offeredto prospective buyers by lenders. Knowing the difference is important.
Pre-qualification is based on information you supply to a lender and does not
include an in-depth review of your credit report or supporting documentation.
Pre—qualification can even be done over the phone or internet. Therefore,pre-
qualified simply means a lender has told you what you would likely qualify for
based on information supplied by you.
Pre-approval is a lengthier process that involves filling out an actual loan
application and supplying requested documentationto a lender along with a
review of your credit report. Once pre-approved,the lender will usually provide
you with a conditional commitmentfor a specific loanamount in writing. You
should also know what interest rate you qualify for once you are pre-approved.

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EarnestMoney
The first step in closing on your home after you have negotiated an offerto
purchase is to give the seller
earnest money. Think of
earnest money as a “deposit”
that shows the selleryou are
serious about purchasing the
home. Earnest money also
acts to “hold” the home while
the details of the offer,
including financing, are ironed
out. The amount of earnest
money is usually between one percent and three percentof the purchase price.
Appraisal
Having the property appraised is usually next on the list. As the buyer you clearly
want to know that the home is worth what you offeredto pay for it; however,
more importantly the lenderneeds to know that the home is worth what they
have beenoffered to lend for it. The lender will choose the appraiser but you, as
the borrower, will pick up the tab. There are varying rules for what the home must
appraise for and how much of the appraised value a lender will lend. For
example, a lender might only be willing to lend 95 percent of the appraised value,
meaning you must either pay the differenceor negotiate a purchase price lower
than the appraised value.

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Selecting a Closing Agent
The actual closing
typically takes
place at either an
attorney’s office or
a title insurance
company. The
closing agent
makes sure all
documents are
properly executed
and handles the
practical aspects of the transaction. Because there are a number things that can
go wrong at the last minute it makes sense to have a real estate attorney handle
the closing. An attorney, for example, is best suited to handle liens,
encumbrances,or other potential obstacles to the transfer of the propertythat
show up at the last minute.
Inspections and Disclosures
After the offerto purchase has been accepted but prior to the day of closing an
inspectionof the property should take place. Typically, a certified/licensed
inspectorwill go over the propertylooking for potential problems with major
systems such as plumbing, HVAC, and electrical as well as with things such as
the roof, walls, foundation, and structural issues.In addition, the selleris required
to prepare and submit a disclosure form noting any known defects in the

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property. Often, the sale itself is contingent upon the results of the inspection,
meaning the buyer can back out of the deal if the inspectionuncovers any major
problems with the property.
Homeowner’s Insurance
As the buyer you will be required by the lender to obtain homeowner’s insurance
prior to the closing. Along with general homeowner’s insurance you may be
required to purchase specific types of insurance, such as flood insurance, based
on where the home is located or other specific local requirements.

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Title Search
A title search must be done to ensure that there are no liens, encumbrances,
unpaid taxes, or other issues with the title to the property. In short, the seller
cannot transfer title to the property if the seller does not have a clear title to begin
with, aside from the seller’s mortgage loan which will be paid off at closing. The
title search is usually done by the closing agent.

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Final Loan Approval
The lender will need to officially approve the mortgage loan once the appraisal
and inspection are done and the homeowner’s insurance is secured.Once the
loan is officially approved the loan documents will be transferred to the closing
agent for execution at the closing.The closing itself may go by rather quickly,
with one documentafter another being trust in front of you to sign.
Given the fact that a home purchase is usually the single biggestpurchase you
will make in your lifetime it is wise to take the time to review these documents
with your attorney prior to the closing so you reallyknow what you are signing at
the closing.

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Closing Costs
As the buyer you will not only be responsible forthe purchase price of the home
but also for a number of “closing costs” associatedwith obtaining the mortgage
loan and the closing itself. Some of these costs are subjectto negotiation
between the parties as part of the original purchase negotiations. Costs related to
the mortgage loan must be itemized by the lender on the HUD-1 Settlement
Statement which must be provided to the buyer prior to closing.
You will also receive a “Truth in Lending Act”, or TILA,form shortly after you
apply for a mortgage loan as well as a revised copy just prior to closing. The

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TILA form indicates what the real cost of your mortgage loan is over the life of the
loan. Some commonclosing costs include, but are not limited to:
Loan origination fee
Down payment
“Points” or loan discount fees
Real estate commissionfees
Appraisal costs
Inspectioncosts
Credit report costs
Notary fees
Title insurance fees
Taxes
Closing fees paid to closing agent
Homeowner’s insurance premium
Recording fees

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The Closing
The actual closing will take place at the closing agent’s office and will often take
no more than about 30 minutes. Typically, the people presentat the closing will
include:
Buyer
Seller
Closing agent
Attorneys for buyer/seller
Representative from the title company
Representative from the lender
Real estate agents for buyer/seller
As the buyer you will be asked to sign a variety of document, including the
mortgage note and the
deed of trust. The
mortgage note is your
promise to repay the
loan. The deed of trust
secures the note and
gives the lender a
secured interest in the
property in the event
you default on the loan.

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Along with executing documents,the funds for the purchase will be transferred at
the closing. If the seller has an existing mortgage the mortgage,along with any
other existing encumbrances,must be paid off at the closing. Finally, you will
receive the keys to your new home!
If you have specific questions relating to the closing on your new home it is best
to consult with an experienced Pennsylvania real estate attorney prior to the
scheduled closing.
Investopedia, Attention Home Buyers! Why You Need a Lawyer
Investopedia, Pre-Approved vs. Pre-Qualified,What’s the Difference?
Home Loan Learning Center, Closing
Investopedia, 12 Steps to Closing a Real Estate Deal
Bankrate, Buying a Home? What to ExpectWhen You Are Closing?
http://www.homeclosing101.org/closing.cfm

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About Curley & Rothman, LLC
Curley & Rothman, LLC is a boutique firm of
commercial lawyers serving clients ranging from
individuals to Fortune 500 corporations in
Pennsylvania and New Jersey. We provide
clients with experienced, skilled, and honest
advice and representation in commercial and
business-related legal matters. Our mantra is
"Relentless Representation" and we hold to it.
We are determined to do everything possible to
provide you with the competitive edge you need to win.
At the Conshohocken law firm of Curley & Rothman, LLC, we understand your time and
resources are valuable, so we will not waste them by agreeing to represent you in a case in
which you cannot prevail. If we agree to take your case, it is because we are confident we can
come up with winning strategies for you. Contact us now by calling 610-834-8819 to schedule
your free consultation today.
Spring Mill Corporate Center
1100 East Hector Street
Suite 425, Conshohocken, PA 19428
www.curleyrothman.com
Phone: 610-834-8819
Fax: 610-834-8813