Successful real estate transactions, especially when buying in New Jersey, start with the buyer assembling the right team of professionals to guide you through the process and regular on-going communication between you and your team of professionals. Your team of professionals should include a great Realtor, a great mortgage lender, and a great real estate attorney.
Your Real Estate Team: Mortgage Lender
Before you look for a home:
When you’ve decided that you would like to buy a home the first step is to determine how much home you can afford. Meet with a mortgage professional to review your income, assets, credit, etc. to find out. There are many mortgage companies out there, and your choice of lender may determine whether your transaction is a dream or a nightmare, so choose wisely. I recommend that you choose someone local that you can reach when you need to, and can sit down with when necessary. I do not recommend choosing an internet based lender where all contact is online or through the telephone.
When interviewing mortgage lenders, keep in mind that each time a lender checks your credit score, the score may drop slightly. Therefore, first choose your lender, based on their estimated interest rates, fees and upon your interview of the representatives. After you have chosen the lender, then have that lender run your credit score so that he can quote you the actual rates based on your credit.
Now that you know how much house you can afford, the next step is to put together the team of real estate professionals that will help you achieve your goals. Your team will include a realtor, a real estate attorney, a home inspector and an insurance professional.
Your Real Estate Team: Realtor
Finding a home:
Once your team is in place it is time to find the perfect home. Your realtor should know your price range as well as your preferences for type of home, neighborhood, etc., and will show you all of the available homes that meet your criteria.
Offer & Acceptance:
Once you have chosen the right house for you and have determined the price that you are willing to pay, your realtor will provide a draft contract. You will complete the document with your offer price, the amount of down payment, the amount to be financed, the requested closing date, inclusions/exclusions, and any other conditions of the offer. The offer is presented to the seller via the listing agent and the seller may reject, accept, or counter-offer. If the offer is accepted or once you are able to negotiate to mutually acceptable terms, the seller will sign the offer and this fully executed document becomes the Contract.
Your realtor will forward the executed contract to your attorney and also to the seller’s attorney. When buying a home in New Jersey, a Real Estate Attorney is an essential member of your Real Estate Team because we will act on your behalf through every step in the home buying process. Attorney Review is the opportunity for the attorneys on both sides of the transaction to review the Contract and request changes that the attorneys feel are in their client’s best interests. Once the requested changes are discussed, negotiated, and finally agreed-upon, the contract will be out of attorney review and is then considered a binding contract.
There are three main things you need to know about Attorney Review:
1) Attorney Review is not three days. The three-day period is the time during which the first Review letter must be sent. If the attorneys do not “disapprove” of the Contract within the first three business days, the Contract will be binding as written.
2) The Contract is not binding on either party until the Review is concluded. This means that it is important that the Review be conducted, and concluded, as quickly as possible.
3) If you have any questions about the Contract, or if there is anything that you feel MUST be added to the Contract, we need to discuss it before Attorney Review is concluded.
Your Real Estate Team: Home Inspectors
The inspection contingency is intended to protect you from serious problems with the home. This would include structural defects, wood destroying insects, safety hazards and environmental hazards. The inspection contingency does not apply to minor maintenance items, cosmetic defects, or items which are simply old, if they nevertheless are in proper working order. The most common inspections are the structural inspection, wood destroying insect inspection, pool and septic inspections (if applicable), underground oil tank sweep and radon test. Your attorney will go over any repair requests you have with the seller’s attorney and will settle any disputes.
The Contract will contain the date by which the buyer is required to obtain a mortgage commitment. If the commitment is not obtained by this date the seller could cancel the Contract.
Title Searches & Insurance:
Title insurance protects you and your mortgage lender against any title claims to the property. Title claims could be anyone claiming an ownership interest in the property or a lien against the property. The attorney will arrange for a title insurance agency to prepare a title report for the home.
The closing should be the easiest part of the entire transaction. As long as the seller, the attorneys, the mortgage company and the title company have done their part in advance. Prior to the closing you will do a final walk-through of the home. Also prior to closing you will have to go to your bank to arrange for the funds for the closing.
The closing itself occurs in two parts. The first part is the closing of the buyer’s mortgage. This usually takes about 30 to 45 minutes. As the mortgage documents are highly standardized, and non-negotiable, the buyer is not expected to carefully read the documents at the closing. The attorney will provide a brief description of each document, along with its legal ramifications, as each document is presented for signature. The second part of the closing is the closing of title, during which the seller’s attorney will provide a Deed which transfers ownership of the home to the buyers, along with other necessary documents. The buyers will get keys to the home and the sellers will receive the funds due to them.
The process of buying a home in New Jersey can seem daunting at first, but when you put together a great team of real estate professionals to guide you through you can focus on the important things like choosing the right home for you and how you’re going to move in!