By Lawrence M. Centanni, Esq.
Buying a home can be an exciting, life-changing prospect. As with other laws, residential real estate laws can vary from state to state. Here’s a quick look at what to know about buying a home in the beautiful garden state of New Jersey.
Do Your Homework
Before you consider purchasing a home be sure to conduct a thorough search of the area you’re considering looking in. How are the schools? Is there retail nearby? How about entertainment? Is the area close to where you work? What is the crime rate like?
In addition to researching the area to ensure it meets your needs, you will need to look into the history of the property. A title search, which a licensed real estate attorney can assist you with, will check for liens, easements, or encumbrances affiliated with any given property.
You will also want to ensure that any residential property you are considering for purchase is properly zoned and free of environmental concerns. Finally, you will want to have a professional home inspection conducted to identify any potential problems and ensure everything is in working order.
Everyone knows buying a home isn’t an inexpensive prospect. There are often “hidden” costs. In addition to the agreed-upon price of the property, you will need to budget for other costs such as:
- Closing costs (typically between two and five percent of the property price in New Jersey).
- Loan application fees.
- Title and homeowner’s insurance.
- Home inspection costs.
- Property taxes.
- Attorney’s fees.
- Moving expenses.
- Utility setup.
- Property maintenance, cleaning, and remodeling costs.
- Association or membership fees.
It’s important that you have a clear understanding of all expenses affiliated with purchasing a home. You don’t want to be hit with unexpected expenses. It is typical that mortgage lenders in New Jersey will want a down payment of 20 percent of the purchase price, according to a blog by Clever. That equates to $94,344 for a home priced at $471,719, the average home value in New Jersey.
Though you can pay less than 20 percent of the purchase price, you will be required to purchase mortgage insurance. You will also end up paying more in interest over the life of your loan if you put down less than 20 percent.
Don’t fret, however. The New Jersey Housing and Mortgage Finance Agency offers mortgage assistance programs for people looking to purchase a home in the garden state. Many of the programs will help with up to $15,000 toward the purchase of a home including first-time homebuyers. Additionally, the Federal Housing Administration (FHA) offers down payment grants and first-time homebuyers can qualify for additional assistance through various programs.
Hire a Real Estate Attorney
Real estate transactions come with contracts, closing documents, and other legal forms that can be overwhelming when buying a home, especially for first-time homebuyers. By working with a licensed real estate attorney such as the Law Office of Lawrence M. Centanni, you can best protect yourself from legal issues and reduce the stress of the home-buying process.
An experienced real estate attorney can review the terms of the purchase including your rights as a buyer and obligations of all parties involved. Having a knowledgeable real estate attorney by your side to review the contract, provide legal advice and guidance, and answer questions before you sign anything is imperative. They can also handle tricky negotiations for you, address last-minute issues, and give you more confidence going into your closing. Finally, they will be there to represent your best financial interests.
The State of New Jersey also has an attorney review clause in contract forms that are pre-printed. This clause means both the buyer and the seller have three days from the date of delivery of executed contracts to consult with a real estate attorney.
This review enables your attorney to look at the contract and either approve or disapprove the terms. Both the buyer and seller have the opportunity to disapprove the contract, which will void it. If the contract is not rejected by either party during the attorney review period, the parties will be bound to the terms of the contract. This is yet another reason to employ a practiced real estate attorney.
Making an Offer
Once you have appropriately budgeted for the purchase of a home, conducted your homework about the area you want to be in, and worked with a real estate agent to find a home that best suits your needs, you’ll want to make an offer. But, before you do, consult with your real estate attorney and consider the following:
- Will repairs be necessary?
- How old is the home and what condition is it in?
- Are the sellers willing to share the expense of repairs or upgrades?
Your real estate attorney and real estate agent can help you make your offer when you are ready to move forward. The offer will need to outline the terms and conditions of the home sale and should include the following:
- The names of the buyer(s) and seller(s).
- The property address.
- The price being offered for the property.
- Any clauses relating to the facilities, appliances, etc.
- Any other clauses such as share of repair or upgrade costs.
- Any contingencies for the offer such as financing guarantees, mold and pest inspections, lead-based paint, radon gas, etc.
Negotiations and Deadlines
Once an offer is made, the seller can accept, reject, or provide a counteroffer with a different price and/or different terms. Should a counteroffer be made, the buyer still has the same options of accepting the counteroffer, rejecting it, or further negotiating the terms with the seller.
This is yet another area in which a real estate attorney can be of assistance. Real estate attorneys are experienced in negotiations and can speed up the timetable for getting an offer negotiated more quickly. This is important given that as long as no offer has been accepted, the house can remain on the market meaning someone else could swoop in and buy it from under you.
There are also deadlines to consider. Once an offer is accepted by both the buyer and seller, a home inspection must be conducted along with any other inspections such as for lead-based paint or infestations. The mortgage must also be approved. All of these items must be completed prior to the closing date.
Get Your Paperwork in Order
It’s best to get a pre-approval for a mortgage if you’re able to do so. You will want to ensure that your credit rating is as good as possible before you go to buy a home as this will affect your interest rate and ability to be approved for a mortgage.
If you haven’t been preapproved, have the following paperwork and documentation in order to expedite the mortgage application process:
- The accepted purchase offer is signed by both parties.
- Name and address of employers for the last two years of the buyer(s).
- The last two federal tax returns are in hardcopy format.
- W-2 forms showing annual gross salary including overtime and bonuses for the last two years.
- If you’re self-employed, federal income tax returns for the last two years along with a profit and loss statement.
- Complete list of debts.
- Verification of monthly lease payments.
- Copy of divorce decree or court order if you pay alimony.
- Name and address of your banks.
- List of financial actions including bonds, certificates of deposit, etc., along with the last three monthly or quarterly statements.
Your mortgage company or lender may ask for additional documentation, but these are the bare minimum you will want to have ready to go when you apply for a home loan.
You will want to take one last walk through the home and property in the 24 hours prior to the closing to ensure all repairs agreed upon have been made and that everything is in working order.
The closing itself generally takes place in the office of your real estate attorney or mortgage lender. Both a closing agent and escrow agent will be present at the closing in addition to your real estate attorney. This is when the final documents will be reviewed and signed. The lender or designee present will oversee the signing and collect any funds due at that time.
At the closing, the buyer will receive their mortgage notice, which is legal evidence of your mortgage and their promise to pay it. This document will include the details of the mortgage from the loan terms and penalties for non-payment in a timely fashion. The Deed of Trust will also be provided which gives the lender a claim against the property in the event the buyer defaults on the terms of their mortgage.
Buying your dream home in New Jersey doesn’t have to become a nightmare. Let the Law Office of Lawrence M. Centanni be there to support you through the buying process. Simply call us at (908) 351-0028 today or visit us online for more information about our real estate legal services.