Blog

What Happens During the Loan Closing Process–In Lay Terms

by Bevin Bermingham on May 20, 2013

One of my clients asked me recently to explain what we had to do once the contract was closed… really. I call this part of the process the “back burner” because there is a lot of waiting involved. Waiting for your loan to be approved by the lender, both you as a borrower and the property under contract as collateral. It’s also a waiting process for the title report to be returned from the title company, telling us what liens need to be cleared by the seller in order to convey “clean” title. (For example, outstanding mortgages or environmental control board liens would need to be resolved before we could close.)

Here is the list I provided to my client about how the mortgage process works, roughly, from when the signed contract is submitted to the lender to closing.

Submit initial application with contract of sale.

Order appraisal.

Your loan rep/mortgage broker asks you for lots of documents to prove your income and rental history.

Underwriting reviews your application, the appraisal and any other documents relating to the condo/coop they ask for (sometimes offering plan, budget, etc…).

They ask for more documents (they always ask for more).

They issue a mortgage commitment. If you are denied a mortgage commitment, this is what triggers the contingency clause in the contract of sale.

Whatever contingencies are asked for as part of the commitment (sometimes it’s even more documents, or updated versions of documents you’ve already given) need to be satisfied. Occasionally even the appraisal needs to be submitted.

Then the loan is “clear to close.” Once we have a clear to close, then we schedule the closing. Sometimes, this is a week or two before we are closing. Most of the time this is the same week or even a couple of days before we want to close. (And sometimes we delay the closing because we’re waiting for the clear to close.)

As for things you should be doing, make sure you keep the ball in your loan rep/mortgage broker’s court at all times as much as possible–when they ask for a document get it to them as quickly as you can.

In the meantime I am ordering the title report and waiting for the mortgage commitment. Once title comes in I’ll review it, find out from the seller how they will address any blemishes on title (things they will need to pay or resolve prior to closing).

Six Questions to Ask When Hiring an Attorney

by Bevin Bermingham on May 13, 2013

Hiring an attorney isn’t something people do very often. I find with my first time home buyer clients especially, I am the first attorney they have worked with. It’s hard to know what questions to ask when you’re making those first introductory calls to decide which attorney is right for you. Here are a few examples of things you should ask.

1. What are your rates?

Obviously, this is an important question to ask before you hire the attorney! I will usually ask the client more about their transaction to get an idea of the scope of work involved. I prefer to bill flat rate, so everyone knows what the transaction will require and so my clients aren’t afraid to call me with questions, lest they get billed for that time.

However, not all transactions are as clear-cut and have more open-ended negotiation periods. For example, Pre- and Post-Nuptial agreements are often revised multiple times, so occasionally hourly billing is more suitable to the type of work.

If an attorney is billing flat rate, ask them to enumerate what is and is not included in that time. If an attorney is billing hourly, ask them whether they will be billing you for travel–this might end up being a lot if your attorney is located in Long Island and your closing location is in the Bronx. You should also ask what the rate is for paralegal and clerical time versus attorney time.

Most attorneys will provide a written Retainer Agreement summarizing the terms of the service they will perform for you and when and how you will be billed for that work.

2. Do you offer free consultations? If not, what is the fee for consultations and what do they involve?

I offer phone consultations. For my real estate clients I follow up with a detailed summary of the settlement process for the transaction the client is exploring.

For more complex matters, like those exploring litigation (not something I practice myself), a consultation is important to determine whether or not you have a case and what your legal options are.

Sometimes clients prefer to have an office to go to to sit with a lawyer in front of a big desk. When I meet clients in person I like to do it over coffee or tea.

3. How much experience do you have in this field?

This is a great question as it helps you get to know the attorney and how they might help you. You can ask for case highlights or whether they have experience doing your specific transaction. For example, short sales and corporate relocation are specific types of real estate transaction that can throw curve balls into the process, it is helpful to ask if the attorney has experience working with the particulars of your transaction.

4. How much and what types of electronic communication do you use? When are you available via email?

Attorneys vary wildly on the types of electronic communication they use. Some firms have electronic client portals where you can log-in to check the status of your work. Some attorneys only use email via their legal assistants and only during office hours. Different clients have different needs around email.

I’m definitely an email-reliant attorney who checks email frequently, including nights and weekends.

5. Will I primarily interact with your assistant or directly with you?

Depending on the law firm, certain types of transactions are mostly coordinated by a legal assistant. It is a good idea to find out ahead of time who you will be relying on primarily for communication and action. As a solo practitioner, I choose to keep my client roster low enough so that I am the only one interacting with my clients.

6. When are you available to have meetings and make phone calls?

Some attorneys have certain night and weekend availability. Some are only available during business hours. As a solo practitioner it’s great for me to be flexible because often my clients’ work schedules (especially if I’m working with a couple) don’t mesh during business hours. I regularly take phone appointments during the evening and on weekend. If you have restrictive time during the workday, this is a good thing to keep in mind when hiring an attorney.

I think that hiring an attorney is often based on two main criteria, experience in your field of need and personality, with the above questions as additional details to help . You need someone you feel you can trust to guide you through a process that is likely unfamiliar to you. The initial communication with the attorney is a chance to get to know this person and find out if they are someone you trust and with whom you feel great about moving forward in your legal transaction.

The One Thing You Can Do to Save Thousands of Dollars on Your Home Purchase

May 6, 2013

When my friends ask me what they need to know when they start shopping for a new home, this is the first piece of advice I give them. I’ve been working on real estate transactions for almost a decade (October is my anniversary), and financing is the most crucial element! The negotiation process with a [...]

Read the full article →

New Practice Areas

May 1, 2012

I am now expanding my practice areas to include the transactional needs of all families. *Real Estate purchases and sales *Wills and Estate Planning *Pre- and Post-Nuptial Agreements *Domestic Partnership Agreements *Contract review for entertainment professionals *Intellectual property protection through copyright, trademark and other protections *Second parent adoption Please get in touch if you have [...]