I was recently involved in what I would describe as a very “uncomfortable” loan closing. My team and I represented the buyers – a wonderful family purchasing their first home. They and we did everything necessary to prepare for closing in a timely and efficient manner. They were buying a charming single-family home for almost $600,000 and were anxious to take possession as their apartment was already overcrowded, even before their recent baby.
The sellers had several complications to get the closing coordinated, but after several postponements, the date was finally set. The signing took place in New York, where it is sometimes common for buyers and sellers to appear at the closing simultaneously. At this occasion, we had the title representative, our bank attorney, the buyer’s attorney, the seller’s attorney, one of the real estate agents, and several family members of the seller. It was a “full house,” to say the least, as everyone was apprehensive about getting this transaction completed after so much delay.
Everyone present soon learned bits and pieces of the circumstances as the evening progressed. The sellers had purchased this property about twelve years ago for close to $400,000. However, over the years, and at this time, they now had multiple liens on the home, including two mortgages, several judgments, and IRS garnishments – to name a few. Several of these liens were delinquent, and interest was accruing by the day, which was one of the reasons the closing kept getting adjourned.
Despite the considerable increase in equity (home value) that the sellers enjoyed, they wouldn’t benefit from it as they owed more in total than the sale price. When all was said and done, they actually had to bring money to closing, which proved to be quite challenging. It was a relatively pleasant interaction otherwise, with everyone sympathizing for them and doing their part – including discounts and concessions - to help get the matter completed.
It was heartbreaking to see the seller’s closing statement and view the list of debts and expenses incurred through fiscal mismanagement. This is the lesson I try to instill in both buyers and sellers when they reach out for consultations - Owning a home is not merely about paying a mortgage and selling for a profit. From the day you buy your home to the day you sell your home, there are valuable opportunities to optimize your finances and maximize your equity. Everyone agrees that it’s never just about the purchase price and the sale price!
In a unique real estate environment such as the one we are in now – we see exceptional opportunities for home buyers and sellers to capitalize on home appreciation gains while benefiting from historically low mortgage rates. I assure you this will not last forever, and many experts are already detailing minor market adjustments that they are starting to experience in the marketplace.
As I often say, a home is likely your largest asset but also your biggest liability! In this regard, we have partnered with top real estate technology firms and created a platform to help with this endeavor. Our completely complimentary system allows a homeowner to optimize their finances and maximize their equity in real-time. They can personalize strategies and custom goals and be given a path for achievement. You can finally be assured that your home and finances are working for you, not against you over the term of your ownership. Visit www.houseequity.us to register for a free subscription. This is available free to any homeowner, regardless of where they received their mortgage.
Shout out and Happy Birthday to Amanda Abbou, Rabbi Aharon Ciment, Tamar Hochstein, Michal Krug, Arun Thomas, Shalom Vegh and Stacey Younger
Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Approved funding is a mortgage company offering competitive interest rates as well as specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 20 years of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at [email protected]