Buying a home can be one of the most important financial and lifestyle-changing decisions in your life. Where you choose to live affects your family, children and work patterns. The past several years have seen many changes in the real estate market, including falling prices and more stringent lending practices. Foreclosures and short sales have had a tremendous impact on the market. While providing prospective buyers with value, if these transactions are not handled properly, the dream of home ownership can quickly become a nightmare.
Residential Real Estate Lawyer NJ
With so much at stake, it is important to work with trusted and trained professionals, including realtors, mortgage bankers/brokers, and legal counsel to help guide you through the process and to help you avoid many of the pitfalls that could impact your transaction. This guide seeks to provide you with an overview of the steps in a standard residential real estate transaction. If you are purchasing a foreclosure or short sale, it is advised that you seek legal counsel at the earliest possible stages. As you read through this guide, please contact us with any questions you may have.
1. DECIDING TO PURCHASE A HOME IN NJ
Were and what type of home they want to purchase and what they can afford. One of the first steps in this process for a Buyer is to contact a bank or mortgage broker to review your finances and provide you with a pre-approval or prequalification letter. Real estate agents and sellers typically require or at least request this letter prior to showing you a home.
2. USING A REAL ESTATE AGENT
Choosing your Realtor can make a big difference on the outcome of your purchase. Buying a home in New Jersey may be the largest financial investment that you make in your lifetime, and it is critical that you are represented by a Realtor that you can trust to act in your best interests and who also has the skills necessary to execute your wishes and best interests adequately. You want your Realtor to represent you, to guide you and advocate for you because a realtor who has listed a home for sale is the agent of the Seller and does not represent you. In some cases a Realtor may act on behalf of both Buyer and Seller. This is called “dual agency.” In such cases you should get a clear explanation on how this works from the Realtor. The Realtor(s) will split a commission on the sale of the home and, while negotiable, typically ranges from 2-6% of the purchase price. When a buyer finds a home on which they wish to make an offer, the broker usually serves as an intermediary to negotiate the price and other items of the sale.
3. THE REAL ESTATE CONTRACT IN NJ
The next step in a home purchase is to sign a written offer in the form a proposed contract of sale that your Realtor will then submit to the Seller and will include all the details of your offer: price, of course, but also mortgage terms, deposit amounts, closing date, inclusions, exclusions, inspection contingency and details, etc. If the Seller accepts the offer the Seller will sign the contract. After the executed contract is delivered to buyer and seller the contract is then forwarded to both parties’ attorneys for their review. The review can take 3 business days, as the contract allows. During this period, either party may cancel the contract without penalty or consequence. If you really want the home (and if you’ve gotten this far, you should be excited and happy), then you will want to promote a speedy attorney review and it is up to you, the buyer (as well as the seller) to help facilitate this process. When choosing an attorney be sure choose someone who has experience in real estate transactions. Once attorney review is completed, you are officially under contract.
4. HOME INSPECTIONS IN NJ
In most cases, Contracts to purchase real estate in New Jersey are subject to the buyer’s right to inspect the property for defects. You should use a licensed NJ home inspector or engineer to complete your inspection and you have a very short time to schedule, perform the inspections, receive your reports and then raise any objections with the seller base upon these reports. Generally one inspector will inspect the home structural, electrical, plumbing, HVAC and other defects, also arranging for radon testing, inspecting for termites and other pests, and other environmental concerns. Other inspections may be warranted, such as lead paint hazard testing or searching for underground oil tanks. Since each property is unique, ask your attorney , Realtor, and home inspector for guidance
5. OBTAINING FINANCING IN NJ
Most home buyers finance 80% or more of their purchase price. Many types of mortgages are now available, including fixed- and adjustable-rate mortgages, as well as FHA, VA, and other methods of financing that permit more than 80% of the Purchase price to be financed. Perhaps one of the most important issues in considering a mortgage, other than the interest rate and term, is the closing costs. These costs will affect the amount you decide to finance and the funds needed by your attorney prior to the closing. You may want your attorney to review the terms of the mortgage prior to the closing. However, it is often standard practice that the attorney explains the documents to the buyer during the closing. Some of the important questions raised are whether and when a mortgage can be prepaid, what happens if you make a late payment, how interest is calculated and how real estate tax payments and homeowner’s insurance are calculated and handled. When your lender has determined you will receive the mortgage loan you will be issued a mortgage commitment.
6. TITLE INSURANCE & HOMEOWNER’S INSURANCE IN NJ
The buyer’s attorney will order a title search from an abstract or title company on your behalf. The title company will search the seller’s title to the property, including any liens or encumbrances that have been placed on the property. The title company will either order a new survey or endorse a pre-existing one, if accepted by the lender. Some of the issues determined by the title company include whether or not the deed correctly describes the property; problems with adjoining owners or prior owners; the existence of — and whether the prior owner agreed to — any easements, covenants, or other restrictions. The title company will create a title report that will describe what is included and excepted from the title insurance, and provide you with an owner’s title insurance policy after the deed to your home has been recorded. You will also be required to obtain a title insurance policy for your lender. Fees for these services and policies will be paid at closing.
Homeowner’s insurance is very different from title insurance. Homeowner’s insurance covers you in the event of damage to your property, and your mortgage lender will require that you name them as an insured. You should contact an insurance agent and obtain a homeowner’s policy in time for closing. You will need to have a paid receipt for the first year’s insurance at the closing, and usually your lender will require that you provide it to them well in advance of closing.
7. THE CLOSING IN NJ
Once the mortgage lender has provided its mortgage commitment, title objections are cleared, and the buyer and the sellers are able to close — in accordance with the terms of the contract — the sale is ready to be closed. You should plan on inspecting the house sometime in the 48 hour period prior to closing. Generally, this walk through is conducted just prior to the closing. The buyer’s attorney and the seller’s attorney will determine any credits due the parties and the title company or Buyer’s attorney will complete a closing statement, including closing costs, and make the mortgage loan funds available to the purchaser. You should work closely with your attorney at this time to determine how much you will need to bring to the closing. The buyer’s attorney will often explain mortgage documents while the buyer executes them. The seller’s attorney will prepare the deed and related transfer documents which all will be signed and delivered at closing.
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