Buying a Home in NJ

What to Expect When Buying a Home?

In this article you will find a step by step guide describing the stages in the process of purchasing your home:

The process of buying a home in NJ is not only a major financial decision. It involves emotional considerations as well. Here are the main considerations you have to consider, and the steps required to reach your target of buying a new home.

1. What are you looking for in a home?

Type of Home – Modern, Traditional, “Turn-Key” condition, “Fixer-Upper”
Features – Number of bedrooms, baths, type of kitchen, garage etc.
Lot size – Do you prefer large yard? small?
Commute – How much time are you willing to spend commuting to work?
Community – Are you looking for a town with great schooling system? Urban, rural?
Price Range – How much do you want to spend?

2. The Legwork – Looking at homes

Now that you have a clearer idea as to what you are looking for, I will take you to see prperties that meet your criteria. All the towns mentioned in this website are towns I know very well. I will provide you with information such as taxes, schools, property values, recreational facilities. Finding the home you like may take time. However, I will watch the market closely and advise you at once of any new property/house that comes out. Also, if you see any property of interest let me know at once so that I can arrange for you to
see it.

3. Getting Pre-Approved

It is wise to obtain a mortgage pre-approval from the mortgage company. Pre-approval is a document from the mortgage company, stating that based on the financial information you furnished ,you are pre-approved for a mortgage of a certain amount at specified terms. Having a pre-approval on hand, gives you a better bargaining position when you will make the offer on the property/house of your choice.

Later onn when the buyer applies for a mortgage commitment the lender will provide the buyer with a Loan Estimate Document 

4. Making an Offer

You have found the home you like. At this point you have to make an offer. Offers are made in writing and are usually accompanied with a deposit to show seriousness. Your deposit is kept in a trust account. If you and the seller will sign a contract, this amount will be applied towards your down payment. If you & the seller do not materialize a contract, then, your check will be returned to you. Keep in mind that in a “hot” market, making a low offer on a property, may result in losing the house to another bidder!

5. Signing of a Contract

Once the seller and you agreed on the price, a contract will then be signed specifying all terms and contingencies. Residential real-estate contracts are prepared by the buyer’s agent. Each party has three business days, during which their attorneys may review the contract. There are certain standard elements covered in the contract.

Closing Date – Settlement – This is a set future date when all parties (seller, buyer, agents, attorneys & mortgage company representative) get together for signing of all documents and you the buyer take title to your new home.

Mortgage Contingency – The buyer undertakes to obtain a mortgage within a specified time. If unable to get the mortgage the contract is then null & void.

Inspections – Certain inspections are required by the mortgage company. These are carried out by certified home inspection companies and cover all aspects of the house. If repairs are required, who pays for them is negotiable. Remember no property/house is perfect! The home inspection is paid by you – the buyer.

Further Deposit – Based on the size of the mortgage you have negotiated, the contract will specify the amount of down payment you will have to pay and when. This additional deposit will also be placed in the trust account.

6. “Walk Through” and Other Items

In between signing of the contract and the closing date, several other “mini-procedures” have to be attended to.

Obtaining Homeowners insurance.
Obtaining Title insurance.
Performing the final “Walk through”  is the last thing that the buyer does before closing. The buyers, plus the real estate agents, walk through the empty house to check that it is in the same condition as inspection day — except that the seller has moved out. I advise clients to do it immediately before closing. This gives the seller the most time to move out properly.

Closing costs – you will be advised by your attorney of the costs and checks you will be required to bring to the closing. Closing costs are usually 2% to 3% of the buying price.

7. The Closing – Settlement

This is the date when all parties get together, usually at the buyer’s attorney’s office, for settling of all accounts and signing of documents.

Participants in this meeting are usually; Seller, Buyer, Real Estate Agents, Attorneys and at times a Mortgage company representative.

During this meeting mortgage is being signed, checks are exchanged, adjustments are made for such items as property taxes, seller is paid and, you the buyer get the title and the keys to you new home!

All the payments to the various parties are recorded by the attorney on a standard form called Closing Disclosure which  itemizes the debits and credits of the seller and buyer. Effective August 1st 2015 this form will have to be provided  to the buyer at least three business days before closing.

If the creditor makes certain significant changes between the time the Closing Disclosure form is given and the closing – specifically, if the creditor makes changes to the APR above 1/8 of a percent for most loans (and 1/4 of a percent for loans with irregular payments or periods), changes the loan product, or adds a prepayment penalty to the loan – the consumer must be provided a new form and an additional three-business-day waiting period after receipt of the new form. Less significant changes can be disclosed on a revised Closing Disclosure form provided to the consumer at or before closing, without delaying the closing.

8. Typical Closing Costs

Legal & Title Costs
Attorney Fee $750 – $1,600
Survey (Condo $150 to $250) $450 – $800
Recording Fees with Mortgage & Deed $200 – $300
Title Searches/Title Policy Endorsements $250 – $500
Title Insurance Premium – see schedule below (NJ Rates for Title Insurance)

Various Inspection Costs
Home inspection $300 – $650
Radon Inspection $60 – $300
Wood Destroying Insect Inspection/Certification $60- $150
Septic Inspection (if applicable) $450 – $750
Oil Tank Inspection (if applicable) $250 – $350
Homeowner’s Insurance – 1 year premium $400 – $900
Flood Insurance (if applicable) $750 – $2,000
Prepaid Tax Adjustment (calculated by attorney at closing)
Mansion Tax when Zoned for Residential Use – 1% of Consideration when Sales Price is Over $1,000,000

Mortgage Costs
Application Fee – (Includes credit report & appraisal) $300-$600
Appraisal $300 – $500
PMI (Private Mortgage Insurance) usually required if mortgage is more than 80% of purchase price
Points – Fee paid to lender to “buy-down” (lower) interest rate on mortgage. One point equals 1% of the mortgaged amount.
Miscellaneous Mortgage Costs $100 – $600

Title Insurance Premiums

9. Finally

From tracing the home of your choice to closing, usually takes from several weeks to months. The process involves many details, patience and dedication. As your agent, my job is to find you the right home in Bergen County NJ at the best possible price, get you the best available financing and, guide you along the way with the least inconvenience to you.

Call or email me today!