Whether you are looking for a home to purchase or are planning to sell your current residence, you likely know the real estate transaction process can be complex and difficult to understand. Much more is involved in buying a home than what you might expect when purchasing a new car, for example. This is because real estate transactions involve substantial sums of money and are often the largest transactions people might ever be involved in during their lives.
Numerous documents must be filed and processed, issues that must be resolved, and steps involved when buying or selling a home in New Jersey. A real estate lawyer in New Jersey at the Ziegler Law Group, LLC can provide skilled representation throughout the process up through and including the real estate closing. This can help to make the closing smoother by ensuring everything is ironed out in advance. Here's what you should know about closing so that you can be prepared.
What Is a Real Estate Closing?
When you are buying or selling real estate, the closing is the final step you must go through to complete the transaction and sell or buy a home. Once the seller accepts the offer made by the buyer to purchase the home, a contract will be presented, reviewed, and signed, and the date for closing will be set. Closing involves the settling of all aspects of the deal and the transfer of the ownership of the property from the seller to the buyer. The buyer will receive the keys to the property and be free to move in, renovate the home, rent it out to someone else, or get it ready to sell to someone else.
The transfer of ownership and the buyer's new mortgage will be recorded to ensure the title records are updated. During the process leading up to the closing, your lender, real estate agent, attorney, and title company will work to facilitate the deal's completion. By being prepared for closing and handling any issues that might arise, your closing process can be much smoother.
Steps Leading Up to a Real Estate Closing in New Jersey
Before you can close on a house in New Jersey, several steps must be completed. The entire process leading up to closing can take from 30 to 45 days. In some cases, issues that arise might push the agreed-upon closing date back. Below are the steps you might expect to go through leading up to closing.
Signing of the Offer
When a buyer wants to buy a home, they'll submit a purchase offer to the seller. Once the seller accepts and signs the offer, the real estate transaction process will begin. The real estate sales contract will then be drafted and presented to the buyer. This document will include all details about what will happen, including a proposed closing date, any furnishings that might come with the house, deadlines for various tasks to be completed, contingencies, and other matters.
Attorney Review
The buyer will have 72 hours to have the real estate contract reviewed by an attorney. This period is critically important because your New Jersey real estate lawyer can evaluate the contract and negotiate contingencies and other changes that can protect your rights. If you and the other party can't reach a negotiated agreement on the terms of the contract within 72 hours, you can back away from the deal without any penalties.
Home Inspection
While buyers aren't required to perform inspections, it is never a good idea to buy a home without one. A home inspection can uncover issues that can't be readily seen during a showing and could potentially be very expensive to repair. Buyers will typically have 14 days after the real estate contract is signed to complete any inspections. If an inspection reveals major needed repairs, the buyer can renegotiate the contract with the seller to try to secure a lower sales price, seller-made repairs, or other concessions. If the buyer has included an inspection contingency in the real estate contract, they can walk away from the deal if the seller doesn't agree to make repairs or lower the price based on the issues discovered during the inspection.
Securing Financing
Most homebuyers get mortgages to finance a real estate transaction. Buyers should start the mortgage process as early as possible because it can be long and difficult. In many cases, buyers will get pre-approved for a mortgage before they begin looking and will then apply for a mortgage once a purchase offer is accepted. Getting a mortgage requires the buyer to have good credit and be financially stable, and the lender will send the mortgage application and supporting financial disclosures through a stringent underwriting process.
The mortgage lender will also schedule an appraisal of the home to ensure its fair market value is equal to or greater than the agreed-upon sales price and might deny a mortgage if the value is less than the sales price.
Opening Escrow
A buyer will have to make an earnest money deposit on the home when they make an offer. This initial amount doesn't go directly to the seller and will instead be held in escrow until the closing. The escrow account will hold both the money and each party's documentation until closing.
Title Search
The homebuyer will want to make sure the title is clear, meaning that it isn't encumbered by a lien, loan, or another claim against the title. These types of issues can cause significant losses if they are not caught before closing. The title company and the buyer's real estate attorney in NJ will research the title to ensure it's free from defects. The buyer might also purchase title insurance to protect them if title defects are later discovered.
Mortgage Approval
Once the other steps have been completed, the mortgage company will notify the buyer when they have received final approval. The next step will be to prepare for and attend the closing.
Final Walkthrough
A day or two before the closing is scheduled, the buyer will have the final walkthrough with their agent. This allows them to verify the seller has made any promised repairs, that nothing else has been changed since the agreement was signed, and that the home is vacant as promised.
Attending the Closing
You'll be required to sign several documents at the closing. Some of these documents might include the following:
- Deed
- Title affidavit
- Closing disclosure
- Settlement statement
- Mortgage documents
- Truth in lending statement
- 1099-S Form
Once all of the documents have been signed and finalized, the money will be paid to the seller. The buyer will receive the keys to the property, and everything will be finished.
What to Bring to the Closing
You should be prepared for the closing and will need to gather the documents you've signed during the entire process, including the contract, inspection report, appraisal report, proof of title insurance, proof of title, your lender's good-faith estimate, and others. The buyer will also need to bring two valid forms of identification, a cashier's check for the closing fees, and a paid receipt showing they have obtained homeowner's insurance.
Who Attends the Closing?
The following parties might be present at the real estate closing:
- Buyer
- Seller
- The buyer's and seller's real estate agents
- Representative of the lender
- New Jersey real estate lawyers for the buyer and seller
- Title agent
In a traditional closing, all parties will be present to sign the documents. In some cases, however, a remote closing might be possible.
Closing Costs
The buyer will be responsible for paying some closing costs and will bring a cashier's check to the closing to pay them. The lender should provide a good-faith estimate of the closing costs early in the process. A settlement statement with all of the final closing costs will be issued a few days before the closing so the buyer knows how much to bring.
Some of the closing costs you might anticipate paying include the following:
- Mortgage application fee
- Home appraisal fee
- Home inspection fees
- Attorney's fees
- Courier fees
- Escrow fees
- Loan origination fee
- Courier fees
- Recording fees
- Title search fee
- Title insurance
- Prepaid interest
To make the closing process go smoothly, you can take steps to protect yourself. Make sure to work with an experienced New Jersey real estate lawyer who can look out for your interests and answer any questions you might have. If you will be submitting documents electronically, take steps to protect yourself against cybercrime and fraud. When you get to closing, review every document carefully before you sign, and don't be afraid to ask questions.
Talk to a Real Estate Attorney in NJ
Working with an experienced real estate attorney in NJ can make the homebuying or home-selling process much easier. To learn how a lawyer might protect your rights and interests during a real estate transaction, contact Ziegler Law Group, LLC today at (973) 533-1100.
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