The purchase or sale of real estate can certainly be considered one of the largest and most important investment decisions. It is imperative to have an understanding of all procedures before purchasing or selling real estate.
Current homeowners as well as first-time home buyers may have many questions regarding their purchase or sale. Some of the most common questions include:
- Should an attorney review my contract?
- Can the terms of the contract be modified?
- What is the effective date of my contract?
- What is title insurance and is it required?
- What is Private Mortgage Insurance (PMI)?
- What can I expect to pay in closing costs?
Contact us at 908-364-2596
THE REAL ESTATE CONTRACT
In has become common practice for real estate brokers to prepare the Contract of Sale. Although a licensed real estate broker may be able to explain the various terms of the contract, legal issues pertaining to deposit monies, ability to obtain a mortgage, home inspections, as well as environmental concerns should be discussed with an attorney. A real estate broker may inform you that the contract will become legally binding at the expiration of a three (3) day review period. 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. Although it is not required, it is highly recommended that the Buyer obtain the services of a qualified Home Inspector in order to evaluate the structure. In the event major defects are disclosed, cancellation of the contract may be possible.
FINANCING YOUR PURCHASE
Upon completion of "Attorney Review" the contract becomes binding on both parties. The Buyer must diligently apply for financing through a bank or mortgage broker. Many clients rely upon our expertise in order to discuss the different types of mortgages available to buyers. Certain buyers may qualify for Federally assisted loans, non-conforming loans or most common, Conventional Loans. Banks usually require a down-payment of twenty (20) percent of the purchase price. In the event a Buyer is seeking financing whereby the deposit is less that twenty (20) percent, banks will often require a Borrower to obtain private mortgage insurance (PMI) in order to protect the bank's loan.
TITLE/ HOMEOWNERS/ FLOOD INSURANCE
The purpose of Title Insurance is to protect 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 is required by most Lenders including banks and individuals. Title Insurance consists of a one time charge payable at closing. The Title Insurance premium is based on the sale price of the property. Once the title work has been reviewed and approved by your attorney and the banks attorney, a closing date can be scheduled. Both the Borrower and the bank will receive a final title policy approximately forty-five (45) days after closing. In addition to Title Insurance, the banks will also require Homeowner's Insurance. In the event the property is purchased without financing, it is imperative for the Homeowner to obtain a Homeowner's Insurance Policy in order to protect against damage to the structure, injury to the individuals, as well as damage by fire and theft. Additionally, Flood Insurance may be required if it has been determined that the property is located within a flood zone.
THE CLOSING
It is common practice for the closing to be conducted at the Buyer's attorney's office. Procedurally, mortgage documents will be reviewed and executed by the Borrower in order for the Borrower to receive mortgage proceeds. Upon the completion of mortgage documents the title closing can take place whereby funds are exchanged for a fully executed Deed and Affidavit of Title which have been prepared by Seller's attorney. A Buyer becomes owner of the property immediately upon the exchange of funds and a fully executed Deed. 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.
CLOSING COSTS
The following items should be anticipated when estimating your closing costs:
- Title Insurance
- Homeowner's Insurance
- Property Survey
- Mortgage Application Fee
- Mortgage Origination Fee and Points
- Private Mortgage Insurance
- Recording Fees
- Inspections (Home, Termite, Radon)
- Attorney's Fees
- Bank Review Fee
- Real Property Tax Escrow
- Homeowner's Insurance Escrow
- Per Diem Mortgage Interest
- Appraisal or Inspection Fee
Most Lenders provide the Borrower with a "Good Faith Estimate" with regard to closing costs. However a review of all costs should be reviewed with your attorney.
COMMERCIAL/RESIDENTIAL REAL ESTATE AND LAND USE
The valued clients of The Law Offices of John B. D'Alessandro, LLC have continued to rely on our ability to effectively negotiate real estate transactions as well as our commitment to "close the deal". It is our priority is to assist our clients in identifying their specific needs and then expedite the process carefully and efficiently. Interpersonal skills in addition to knowledge of state and municipal laws are critical to success in the real estate market. Clients with real estate needs are able to benefit from our experience in the legal fields of corporate and partnership transactions as well as litigation.
