Many times, the Real Estate Contract is the beginning of the process. The Contract will have cover legal issues pertaining to deposit monies, the mortgage, home inspections, as well as environmental concerns. It is important to understand that New Jersey has imposed a mandatory three (3) day review period for broker prepared contracts whereby both Buyer and Seller shall have an opportunity to consult an attorney during that period. An attorney may prepare an addendum to a contract or cancel the contract within the Attorney Review period if either party so desires.
FINANCING YOUR PURCHASE
Most of my clients already have discussed financing with their bank or lender prior to signing a Contract. If not, however, upon completion of "Attorney Review" the contract becomes binding on both parties. The Buyer must diligently apply for financing through a lender. Banks usually require a down-payment of twenty (20) percent of the purchase price. Some allow for a smaller down payment, but will require mortgage insurance or P.M.I. (private mortgage insurance).
TITLE INSURANCE, HOMEOWNERS & FLOOD INSURANCE
Once the Contract is binding, and you've had an opportunity to discuss financing with a bank or lender, It's time to look for Title Insurance. Title Insurance is required by most lenders, and protects the owner of the property as well as the Lender's interest from claims which may be brought against the property after the closing. Title Insurance consists of a one time charge payable at closing. In addition to Title Insurance, the banks will also require Homeowner's Insurance. Lender's require that you pre-pay a year of homeowners insurance. Flood Insurance may also be required if the property is located in a flood zone.
The home inspection is, I believe, the most important part of the process prior to closing. This period of time allows you to hire a home inspector to come out to the property and "inspect" the property for any irregularities and/or negative attributes relating to the house. The home inspector will compile a report marking the areas of his inspection with a summary of the problems within the house. Home inspectors will pick up on a variety of issues including roofing issues, water damage, code violations, central air/heating issues, etc. If there are problems found during the inspection period, your attorney will work with the other side's attorney to either (a) lower the purchase price, or (b) have the buyer's receive a credit at closing.
It is common practice for the closing to be conducted at the Title Company's office. At closing, mortgage documents will be reviewed and executed by the Borrower in order for the Borrower to receive mortgage proceeds. After review, the title closing can take place whereby funds are exchanged for a fully executed Deed and Affidavit of Title which are usually prepared by Seller's attorney. The Deed and Mortgage are then recorded with the Clerk of the County in which the property is located and the mortgage documents are forwarded to the bank. Any credits issued to the Buyer will be outlined at closing.
Closing Costs vary and include the following:
-Termite Inspection cost
-Property Tax escrow
-Mortgage origination fee
-Home inspection cost
There may be other costs added into your closing costs and they will be reviewed by your attorney.
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