Buying real estate in New York is an incredibly expensive and stressful process. There’s usually more demand than supply, which means that you might have to bid well over the asking price in order to make a purchase. Given the density of housing, it’s also likely that you will have to make certain compromises regarding the location or amenities of the property in order to find something in your budget.
Shaving a few thousand dollars off your closing costs might seem like a great way to keep your real estate expenses lower, but many of the fees that you have the power to eliminate are actually there to protect you as the buyer.
There’s a very good reason you pay for two title policies
When you purchase a financed home, you may notice that there are two title insurance premiums on your closing disclosure. One of those policies protects the lender, while the other protects you. You cannot waive the lender policy, and they will probably require you to pay that cost for them. In a more buyer-directed market, it is sometimes possible to get a seller to cover closing costs.
However, you have the right to waive a buyer’s policy in many cases. Doing so could mean that you lose your equity and your down payment if someone shows up in the future with a credible claim to the property. Title insurance will not only pay for an attorney to help defend your ownership of the house, but it will compensate you for your investment in the property if you lose the house due to a title claim.
Waiving appraisals and inspections can mean buying into a money pit
There are certain inspections required by your lender, and there will be others that are done on your behalf. Verifying that the value of the property is in line with the amount financed is the primary purpose of the mortgage appraisal process. Other inspections serve to protect you from buying a property with significant defects.
Just because neither you nor your real estate professional noticed the cracks in the basement doesn’t mean the foundation is sound. Paying for professional inspections before you close and including contingencies in your purchase offer regarding the ability of the property to pass inspection can help save you from investing money in a home that is only going to require more in the very near future.
Discussing your desires and reviewing your closing disclosure, as well as sellers disclosures and other critical paperwork, with an experienced New York real estate attorney can give you a better idea of what your money pays for and make you feel more comfortable completing this anxiety-inducing process.