Procedures for Buyers

A general guideline for Connecticut lending institutions is: Principal plus Interest plus Taxes plus Insurance should not exceed 28 to 30 percent of your Monthly Gross Income. Total indebtedness (a commitments of six months or longer) should not exceed 36 percent of your monthly gross income. This is only general guideline. There may be exceptions. Your Realtor will be able to give you more details.

Make an Offer
Sign an Offer to Purchase or "Binder."

An offer to purchase is traditionally accompanied by a good faith deposit of 1% of the offering price of the home, made out to Coldwell Banker R.E., Trustee. This check must be deposited in an escrow within 3 banking days of acceptance of offer.

An offer to purchase will contain a number of contingencies which must be satisfied within 7 to 10 days, such as:

• Building inspection
• Termite inspection
• Septic inspection
• Radon inspection
• Asbestos inspection
• Water testing

The price of the home will be negotiated between the Listing Real Estate Agent and the Selling Real Estate Agent.

In Connecticut, you must be represented by Counsel. The banks generally will release funds only to an attorney. Within 7 to 10 days of making an offer, the buyer will sign a contract that will carry only the mortgage contingency. At this time, the buyer will submit a check for the balance of 10% of the purchase price.

At closing, you must submit a certified check to cover the closing costs and the remaining balance of the home after the mortgage.  

Make application for your mortgage. Your Realtor is prepared to help you in shopping for the best available rate and to advise you on different financing options.

Inform yourselves of prepayment penalties, points, service charges, and ceilings on variable rates. Banks may require 3 to 4 weeks to approve a mortgage, so time is of the essence in making application.

Know the home you are buying. Make arrangements for your inspections. Your Realtor may recommend several inspectors, from whom you may choose. The cost for these inspections is paid by the buyer.

Contract

The State of Connecticut requires that all real estate transactions be in writing. The Contract is the legal document binding both parties and is generally signed within 7 to 10 working days from the original offer. it is customary that by the time of contract signing all contingencies have been released with the exception of the mortgage, which may be continued in the contract for up to 21 working days until the lender responds to the buyers mortgage application. Completion of the Radon report may also be included as a contingency for a limited period of time.

The buyer, or his representative, and the Realtor involved in the, sale should conduct a final inspection of the property being purchased just prior to closing.

Counsel will generally recommend that the buyer take possession -at closing, not before, unless unusual circumstances exist. In such case buyer and seller should be legally protected.

Closing Costs

Lending institutions generally require that some money be set aside in escrow against future tax payments; some require a deposit of six months' taxes.

Lending institutions require hazard insurance for an amount equal to 80 percent of today's replacement value of your home. The premium is usually for a one-year term. You may also be required to take out title insurance on the property.

You will be required to reimburse the seller for any prepayments he may have made on taxes, and if there is heating oil in the tank at the time of closing, you will have to pay for that, too.

Total closing costs run approximately one percent of the sales price for an average priced home.

The Closing

The Closing may take place at the office of the attorney for the seller, at the lending institution, or some other designated place. All buyers, sellers, counsel for both parties and your Realtor are usually present. At the Closing, title to the property and actual possession of the property change from the seller to the buyer. The documentation for closing on a property in the State of Connecticut is fairly extensive. You should expect the process to take at least one hour.

If you have any questions whatsoever, please do not hesitate to contact me. I am here to serve you and to make the entire procedure as comfortable as possible for all parties involved.