Buying a Home in New Jersey
The following is a sequence of events that will occur from the time you find your new home until the time you take possession:
When you have found the “right” home, the first step is to sign a contract stating the price and terms you are willing to offer for a house. In New Jersey, all offers must be in writing – there are no “verbal” agreements for real estate. The realtor prepares the contract. When the offer is presented to the sellers (usually immediately after you have signed the contract), it is accompanied by a check that is usually $1,000.00. This check – referred to as earnest money, is deposited into the broker’s or attorney’s trust account with the deposit to be released to the seller at closing. If no agreement is reached, this check will be returned to you. When all of the terms of the sale have been agreed upon, the sellers will sign the contract, and you will have to agree and initial any and all changes which have been ammended.
The usual contract is subject to a few contingencies that will vary according to the property and your needs as a buyer. When all the contingencies have been met, you will be committed to purchase the house. The following are possible contingencies:
1. Attorney Review: 3-5 days.
You have the option of hiring a New Jersey attorney who deals with real estate.(Need an attorney to protect your rights, and your deposit). During the three - five business days following delivery of a fully executed copy of a contract to all parties, your attorney will review the contract and contact the sellers attorney to approve the contract. Changes may be made during the attorney review period but must be agreed upon by all parties. Discuss with your attorney the possibilities of time adjustments to the three-five days. During the crucial time the sellers can still show the property and accept another offer.
All offers must go directly to the sellers attorney, and the listing agent should not involve themselves with further negotiation. Its the sellers attorney, duty to negotiate any additional offers with buyers and sellers.
Obviously, its the buyers best interest to get out of review as quickly as possible.
(The Mortgage Documents should be completed and submitted to lender for approval.)
2. Structural Inspection: 10 days.
It is recommended that you hire a qualified inspector to inspect the house for major structural defects.
3. Termite Inspection: 10 days.
It is recommended that you hire a licensed exterminator to inspect the house for all woodbooring insects. Should the inspection reveal infestation and/or damage, the seller will be notified and probably will remedy the problem because you will need a clear termite certification and one-year warranty form the termite company in order to obtain a mortgage.
If your home looks like this, you definitly do nt have to worry about any levels of radon.......
But it doesnt.......LOL!
4. Radon Inspection: 10 days.
Many buyers are ordering a radon inspection to ascertain that the radon level is within legal standards 4.0 or less, not to pose a health hazard.
If the home has radon, this can be remediated, by installing a tube into the slab floor and exhausting it out the founadtion wall with the assistance of a small fan inside the tube. The tube will release the radon gas out of the basement.
Keep in mind a home that is vacant and closed up for weeks or months will result a much higher reading than a home that is lived in. If a basement is used actively and window and doors have constant movement radon, will be less likely. Radon, comes from the natural gas in the earth, and is more likely in mountain like areas. The Radon system is small and not a deal breaker. Typically sellers will cover the costs to assure the gases are being exhausted properly. System looks like this inside & outside:
5. Mortgage Contingency: 30 days. (from the end of attorney review)
Most people will be borrowing money to buy their new home. In this case, a contingency outlining the terms of the mortgage (amount, length of mortgage, interest rate) must be included. Customarily, the interest rate and points are
specified as “prevailing” rate and points. The mortgage should be applied for as soon as possible.
The contract must state a closing date, usually written as “on or before” a specific closing date. This date often influence the negotiations since taking possession at the seller’s convenience make the offer more attractive.
Generally, within 10 - 14 days, attorneys will have approved the contract, inspections will have been completed, the remainder of the deposit money (usually totaling % of the purchase price, depending on your loan type) will have been deposited into the same broker’s or attorney’s trust account where it is held until closing. The amount and date of deposit monies will be a clause in your contract.
As soon as you have heard a decision by the bank on your mortgage application (generally 30 days); your attorney will then start to prepare for the closing. A title search and application for title insurance will be made. The deed will be rewritten in your name and all paperwork necessary for settlement completed. If an early closing is desired and mortgage approval is certain, your attorney may start hits procedure before approval is received. At the closing you will be required to have homeowner’s insurance for at least the amount of the mortgage. (Your Mortgage company will need to speak to your insurance rep, to make sure you have the proper insurance coverages the bank is requesting. Then the mortgage rep will need a copy of the declaration page. Your insurance should only take affect the day of closing when you take ownership.Although, you will be required to pay 1 year upfront to get the declaration page. (Bank wants 1 year Insurance paid in full, in advance so they can have 1 year of payments saved in case of default.)
WALK THRU: It is recommended that just prior to closing, you inspect your house with the realtor to verify that it is in the same condition that it was when you went to contract. Also, it is recommended that you check with the realtor so that proper arrangements are made regarding the transfer of utilities into your name.
Just prior to closing, your attorney will give you an itemized list of all expected expenses: Property tax apportionment, fees, fuel oil remaining, etc. It is at the closing that you officially take title to the property and are entitled to possession.
In summary, here is the sequence:
1. Realtor prepares the contract with your price offer and terms.
2. Realtor negotiates contract with seller.
3. Changes agreed upon in Attorney Review and contract initialed.
4. Attorney review completed and under contract.
5. Complete Mortgage Application PACKAGE should begin processing to lender with all the required docs.
6. Home Inspection Process - Must be completed within 10-14 days of the end of home inspection
7. Second part of deposit turned over to sellers attorney.
8. Mortgage should be approved within 30 days of Approved Contract.
9. Title work ordered by attorney, After Mortgage Commitment and Conditions are met.
10.Homeowners’ insurance 1 Year Paid in Full and Declaration Page Submitted to Lender
11.Utilities transferred into buyers name.
12.Pre-closing walk-through Day Before or Day of Closing.
13.Attorney will give you final figures the day before or the day of Closing.
A bank check must be brought to the closing payable to your attorney.
-------> GO OUT AND CELEBRATE!!!