It is time to figure out how much house you can afford and what monthly payment you’re comfortable with. It is time to contact a lender. A lender will ask you for the following:
- 30 - 60 days of bank statements with all pages included (including blank and non-informative pages).
- Tax Returns...Usually two years.
4 to 8 weeks of pay stubs for proof of income.
- Statements showing assets such as stock portfolio, retirement investments (401k plan, IRA).
These documents, along with your credit score, down payment monies, and income, will help a bank determine how much house you can truly afford.
Public house hunting websites' information is not 100% accurate. REALTORS get up to date listings from the MLS databases for a more accurate availability of houses. A realtor working as a Buyer’s Agent will help work for your best interest in negotiating the price as best as the market allows them to, research similar processes to help compare prices of recently sold properties (AKA COMPS), confirm data on the property, and provide up-to-date tax information. You will also be required to sign the CONSUMER INFORMATION STATEMENT. This document is NOT A CONTRACT. It is a state-required document that identifies the REALTOR party you’re working with treats as a fiduciary. You will also be required to sign the Attorney General’s Memorandum regarding discrimination.
So now, you're pre-approved, you have picked out your REALTOR, and you're off to the races!
Important Tip: always see a property in person to get a sense of the property and potential remodel capabilities.
New Jersey REALTORS are permitted and required to submit a 13 Page Contract to purchase. This document means that you accept the offer and meet both parties' minds. Once signed by both parties, this contract is a VALID and ENFORCEABLE contract. This document will have your name(s), address where you currently live, contact number & email, as well as the offer price, total down payment monies, estimated closing date, and terms of the purchase. You will sign it as well as your REALTOR. It will then get scanned and emailed along with your PRE-APPROVAL, Consumer Information Statement (CIS), Attorney General’s Memorandum (AGM), Proof of Funds (POF...This is a must).
In the State of New Jersey, you have the option of retaining an attorney. It would be pennywise, dollar foolish to skip this part as a REALTOR is most likely, not legal counsel. While an NJ Real Estate contract is a valid contract, you have the right to identify and contact an attorney of your choice to “REVIEW” the agreement. Attorney review is usually 3 to 5 business days. Sometimes it is longer, and sometimes it is shorter. During this process, the attorneys will hash out the terms, estimated closing date, and purchase terms. Once attorney review is completed, you’re officially under contract.
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This is an essential part of the process. A Licensed Inspector or Engineer needs to test appliances & utility systems. An Inspector needs to examine electrical receptacles, electrical panels, light switches, light fixtures to ensure that they're all in working order. An Inspector needs to inspect the pool, read the siding or roof, and review the land's grade surrounding the property. An Inspector may even be required to check for Lead Paint, Asbestos, Mold, or Foundation Issues.
They come to your purchase property, take photos, take notes, test the functionality of things and compile a report for you, your agent, and the attorney to review. This report is forwarded to the other side for review. If repairs or alterations are needed, this is the time for the buying party to speak up. Assuming that everything can be agreed upon, this leads us to the next step.
So you're under contract, fantastic! There are still tasks left to do. As a REALTOR, our job is to monitor the final steps in the transaction.
An appraisal is ordered by your lender, coordinated by your REALTOR & the seller's REALTOR. The appraiser reviews the property for size, space, location, and quality. They then compare properties to ensure that what you're spending is sensible.
Once your property APPRAISES, and all is well, your lender will issue a COMMITMENT lender committing to loaning your money.
The Title is essential as your attorney will coordinate a title search to ensure that the property you're buying has been transferred legally from party to party since the beginning of time.
Homeowners Insurance: Before closing, you must PAY for a full INSURANCE year. You will provide this receipt to your lender as evidence.
Once all of the above is complete, and both parties are ready to move forward and close, the attorneys will coordinate a closing date. Before the closing date (usually 24 hours before or the day of), you will visit the property to ensure that all appliances are still present, the house is not damaged, and that the sellers have begun packing their belongings.