Buying a house in the Garden State.

The Realtor Contract and Attorney Review:
Once you have settled on the home you wish to purchase, the realtor will have you sign a realtor prepared form contract that is used in nearly every real estate purchase in New Jersey. At the time you sign the contract, the realtor will ask you for the name and contact information for your attorney. Additionally, you may be asked for a small deposit on contract. Assuming the seller accepts your offer, the seller will sign the same contract. The realtor will then send a copy of the fully signed contract to the seller’s and buyer’s respective attorney. Upon receipt of the contract, your attorney will review the contract. This period of “attorney review” lasts three days. During attorney review, your attorney will send an “Attorney Review Letter” to the seller’s attorney delineating the changes to be made to the realtor contract. Once the parties agree to changes made by the buyer and seller, attorney review is concluded. The seller and buyer are the contractually obligated to each other to sell and buy the property. Shortly after conclusion of attorney review, you may be asked for a larger, second deposit. The amount of the second deposit can greatly vary from a small amount of money to as high as ten percent. This figure is negotiable, but the more you put down on contract, the more attractive you are as a buyer. On the other hand, the more money you put down on contract, the greater amount you risk losing should you decide not to go through with the purchase and breach the contract.

Get a Home Inspection Immediately after the Conclusion of Attorney Review:
Now that attorney review is concluded, you need to engage the services of a home inspector to inspect the condition of the home. Unless you know whose services you would like to engage, ask your realtor for a recommendation or simply conduct an internet search for a local inspector. The inspector will prepare a report summarizing his findings about the building, such as structural condition, roof, basement, plumbing and electrical systems. Consider being present for the inspection. Have a termite/wood boring insect inspection as well. In certain areas, a radon inspection is performed. Ask your inspector if a radon inspection is necessary. Once you receive the report, forward it to your attorney. Discuss with your attorney the repairs you wish the seller to make. Your attorney should include the desired repairs in the contract of sale. Typically, all of this should be done within 10 days of conclusion of attorney review, so do not delay in getting your home inspection done so that you may timely request the repairs that you want done by the seller.

Obtaining a Mortgage Commitment:
Assuming that as the buyer you do not have the funds to buy the property with cash you have on hand, you will seek to obtain mortgage funds from a lender. Of all the things that you must do in the home purchase process, this is perhaps the most important obligation you must fulfill as a buyer. Intentionally failing to submit to the mortgage process is a material breach of the contract and you risk losing part or all of your contract deposit. A lender will request financial records from you such as tax returns and other financial records. You may either approach a bank or use the services of a mortgage broker to apply for purchase money funds. This process can take 45 days or more. Be patient. Once a lender has agreed to provide you with mortgage funds, you will be issued a mortgage commitment. A mortgage commitment is a promise from a lender to provide you with a certain amount of money specifically to purchase the home that you are in contract to purchase, at a certain interest rate, over a given period of time, typically somewhere between 15 and 30 years. Once you receive the mortgage commitment, you must send a copy to your attorney without delay. Your attorney will then forward it to the seller’s attorney. You are obligated to send the commitment to the seller’s attorney. It lets the seller know that they have a real buyer and this transaction is moving toward conclusion.

Order a Title Report:
Your attorney will order a title report from a title insurance company or a title abstract company. The title company will perform research on the property to determine who owns the property and whether there are any judgments or liens that need to be paid off in order for the seller to transfer the property to you free and clear of these items. These items are compiled into a “title report.” Your attorney will go over the findings of the title report with you. Once these issues are addressed by the seller, and any judgments and other items against the parties are cleared, and the title insurance premium is paid by you, the title company will issue title insurance for the property at the closing insuring clear title to you.

Homeowner’s Insurance:
Often overlooked until the last minute is securing homeowner’s Insurance. It is also known as fire insurance. Your lender will require it before they authorize any funds released.

The Closing:
The moment you have been waiting patiently for several months has arrived. Make sure you bring a pen, preferably blue, and your valid unexpired driver’s license. The closing in New Jersey may take place in a variety of manners. Sometimes, it will be at your attorney’s office, other times it may be at the title company. Frequently, the seller and his attorney will not be present at the closing but will have forwarded the fully executed Deed and other closing documents to your attorney or your title company. The mortgage documents will also be waiting for your execution at the closing. Once the mortgage documents are signed, the funds due to the seller are given to the seller in the form of a bank check or wire, minus the seller’s closing costs. You will get a Deed signed by the seller transferring ownership to you. Your attorney or your title company will send the original deed to the Office of the County Clerk where the property is located for recording. Upon recordation, the recorded, original deed is then returned to your attorney or you. The transaction is now closed, and you now own the property.