CONGRATULATIONS!
You have decided to purchase a home, or are thinking about buying one. You'll be joining the ranks of hundreds of families who realize that home ownership offers a number of benefits including building equity, saving for the future, and creating an environment for your family. When you own your own home, your hard-earned dollars contribute to your mortgage. The equity you earn is yours. Over time,
your home will increase in value.
The first step to home ownership is to find a home. It is a good idea to use a professional realtor who will work with you to find the home of your dreams in the neighborhood you want. Once you find a home, you will make an offer on the home with the help of your realtor. Once the seller accepts the offer, you will sign a contract. It is at this point I advise my clients to retain a qualified real estate attorney. My team is here to answer your questions and help with the transition to home owner. Here are a few things to
keep in mind when purchasing a home:
- CONTRACT TERMS
As a matter of New Jersey law, we have only three (3) days from the date the contract is signed and delivered to all parties to negotiate changes. If you believe there are any special requirements, it is important to bring them to the attorneys attention. In addition to a closing date, please advise them of any special terms. Typically, this would address special appliances, fixtures, chandeliers, etc. which will be included or excluded from the sale. This part of the transaction is known as Attorney Review. - CLOSING DATE
If you have any special requirements on a closing date, it is important to let your attorney know early in the transaction. Closing dates are difficult to guarantee. Although your contract states a closing date, the actual closing date will depend upon, among other things, a) when the Lender approves you to close, b) when you sell your current home or are able to terminate your current lease, c) and, most significantly, when your Seller is able to move to their new residence. Likewise, you should avoid moving into a home that you do not yet own. The problem of having the Buyer dependant on selling his or her own home often creates a domino effect. One delay by any party can negatively impact several other transactions. This is an unavoidable reality. - GAP PERIODS FOR RENTING, MOVING AND STORAGE
Many clients want to know whether they can buy a new home, but not move in immediately. Although anything may be possible, I strongly advise against buying and allowing the Seller to remain. In the best of all worlds, you have closed on the new home and the occupants of the new home have moved out. Now, you are ready move in at your own convenience. If you have already sold your old home, but you cannot yet move into your new home, I suggest that you place your belongings in temporary storage instead paying rent to your new landlord. Although this seems like an extra step and expense, you save on tenants insurance and the stress that you will likely endure given the probability that this landlord has no experience in what his or her rights and responsibilites entail.
- INSPECTIONS AND REPORTS:
Your contract permits you to undertake or waive many types of inspections. You should immediately
work with your realtor to schedule the inspections once attorney review is concluded. - BANK/LENDER REQUIREMENTS:
Your contract may have a mortgage contingency. If you have not already applied for a mortgage, you
should do so immediately. - HOME OWNERS INSURANCE
You cannot close without homeowners insurance on your new home. You will have to pay at least
the amount of your mortgage, plus ten percent. Please discuss the amount you will need with your
insurance agent. Please also notify your insurance agent of your lender because your insurance policy
must list your lender as a beneficiary. Thereafter, your insurance agent must send to me a receipt
showing that the insurance policy has been prepaid for one year together with a copy of the
declaration page and the policy. - TITLE SEARCHES
Generally, the following searches are ordered:
- Judgment and lien search on the property;
- Judgment and lien search on the Seller;
- Judgment and lien search on you;
- Survey; and
- Title insurance commitment
- This information dictates whether there will be a smooth or complicated closing based on the findings of the title company.
- FINAL INSPECTION AND WALK THROUGH
It is important to schedule a time with your realtor to inspect the house on the morning of the closing.
I strongly urge all clients to conduct this final inspection and walk through the property with the
Seller. You have this right in the contract. The purpose of the walk through is not to nit-pick on
minor items. You simply want to inspect the premises and make certain that no major structural
problems have arisen since the last inspection. Please do not enter into any discussion or debate with
the Seller; simply make a note of his or her comments and bring them to your attorneys attention. - HOW MUCH MONEY DO I NEED?
Unfortunately, attorneys are rarely ever able to provide final figures until the day before closing. This
is because the lender typically gives the final figures the day before closing. Also, all monies to be paid
must be done via an attorney trust account. Some of the costs associated with a purchase are as
follows: - Recording fees (notices of settlement, discharges, deeds and mortgages) estimate $575.00;
- Title searches and insurance (depends upon purchase price and size of your mortgage loan) estimate $1,000.00 to $3,000.00;
- Three months real estate tax depends upon your town and assessment;
- One months prepaid interest to your lender;
- Survey cost (amount depends upon size of property) - $550.00 to $1,500.00;
- All inspection costs you should receive bills with reports - $1,500.00;
- Unpaid bank fees, including commitment, points and escrows;
- Attorneys Fee - $850.00 - $1,000.00 plus costs of mailings for the purchase of your home.
- Any costs and miscellaneous expense unique to your transaction; Whatever amount you need to bring to closing, it must be a certified check, bank check or money order. DO NOT BRING A PERSONAL CHECK!
Communication is important throughout the entire transaction in order to keep you fully abreast of developments in this matter. Generally, there is an initial flurry of activity and thereafter a lull. After you complete inspections and contract negotiations are complete, there is very little that is actually undertaken until the Bank issues its final closing instructions and requirements. Unfortunately, most banks do not supply this information until two days before the closing date. In fact, many banks now are only supplying this information the evening before closing or the morning of closing. Therefore, you should, when scheduling your move from your old home and the walk through of your new home, leave a few hours to travel or otherwise meet last minute requirements.
IF YOU ARE ALSO SELLING
If you have an outstanding mortgage(s) or home equity loan(s), you must have your current bank send your attorney a mortgage pay off statement for your existing mortgage. You should also supply the following to your attorney:
- Copy of current deed;
- Copy of current title insurance policy; and
- Most recent survey.
