Whether for investment or for staying, purchasing a property is always an important decision. One of the biggest decisions you take. It’s important that you arm yourself with all the information you would need and do the necessary home work before deciding.
Here’s a roadmap to help you steer through the process of your property ownership.
I) Budgeting
Ensure you know the expenses involved while calculating your budget. Check this online tool www.njhousing.gov/includes/calculator.html. You need to consider the costs in your monthly budget like maintenance costs, taxes and special assessments, home/hazard insurance.
II) Credit Scores
Lenders would like to see your credit history. How promptly you repaid. This is reflected in your FICO score which ranges from 300-850. Higher your score is the better.
Down Payment
This is the upfront initial payment you make. Something that’ll impact your mortgage rate of interest and terms of a mortgage loan. In case your down payment is less than 20% of the property price you’ll need a mortgage insurance.
Now that you’ve planned your budget, you can start looking your choice of property as per your budget.
III) Complete Your Wish-List
Prepare a list of what you want and what you can do without. Include your home’s interior layout, the number of rooms, bathrooms, exterior, location, neighborhood choice, etc.
IV) Property Types As Per Your Choice
This will depend on your need. Ensure that you have a long time planning of at least 5 years hence. Do you want a property to start your family or renting out? Different types of properties are available to meet your need…
- Single-Family ( New construction / old home )
Both are suitable for the first-time buyers. Older homes would be more spacious, affordable, located in convenient areas. New homes have better facilities like an efficient heating system, insulation, lower maintenance cost.
2. Condominium
Individually-owned housing unit in a multi-unit building. A condo owner holds the lone title of a unit but shares with other unitholders the land and common property (elevators, halls, roof, stairs, etc.) and the maintenance expenses as well.
3. Multifamily
Buying a 2 to 4 unit property allows you both investment chance and a personal residence as well.
Advantage: Tax and income benefits.
Disadvantage: Searching and selecting the tenant, security deposits, eviction procedures, repairs, etc.
4. Fixer-Upper
Older homes in need of refurbishing. If you opt for one, be prepared for some repairing costs and additional issues too that may come up. Rehabilitation costs can rise significantly. Ensure you appoint a home inspector or contractor to give you a detail explanation of rehab work with cost estimates.
5. Your Search Made Easy
You can definitely search on your own, but a professional intervention would make your search easier and organized. Once you identify the town where you wish to purchase, schedule meetings with real estate agents in the area or owners in case you are choosing “sale by owner”, attend open houses. Also, take help of newspapers, bulletin boards, talk to friends, acquaintances, and colleagues.
6. Applying For Loan
You can request a mortgage loan before making an offer. The possible lenders to consider…
Mortgage companies
Savings and loan institutions
Federal credit unions
Other financial institutions
V) Loan Types
Pre-qualified – you would be qualified for a mortgage (and rate) but not guaranteed (including rate).
Pre-approved- guaranteed mortgage at a specified rate.
VI) Offer
It’s a legally binding commitment stating your consent of buying a particular home at a specific price provided certain terms and conditions are fulfilled. It is to be signed both by the buyer and the seller.
Ensure that the offer mentions all the T&Cs of the sale including any special provisions regarding fixtures, appliances, purchase price including the deposit paid to invoke the offer, any additional deadline dates or riders, contingencies, etc.
VII) Getting The Home Inspected
A vital step in your buying cycle. A licensed inspector (after examining the structure and systems of the home like heating, plumbing, electrical systems) will brief you about the potential problems enabling you to take an informed decision in your making / not making a purchase.
VIII) Meet The Deadlines
Take into account how long it’ll take you to negotiate the offer with the seller, get an inspection, and get a mortgage approved. Remember, your deal could fail if you miss meeting the deadlines.
X) The Agreement
The Purchase-Sale Agreement details down the agreement specifically and it’s a legally binding contract. Better take help of an attorney to review it before you sign. Ensure that your agreement includes a mortgage contingency clause. It states that the purchase will depend on your getting a mortgage. This’ll help to prevent losing your deposit in case your mortgage is not approved. Other contingencies including a closing date and occupancy date must also be mentioned.
XI) Title Search And Title Insurance
Needed to verify whether the seller truly owns the property and there are no other claims on the property. The lender needs this to protect its investment, and this is to be paid by you, the buyer.
XII) Home Owner’s Insurance
You’ll need to present a paid receipt of home owner’s insurance at closing.
XIII) Survey
Most transactions require this. It’s a technical drawing of a property and its structures, and you should get it done at your cost, well in advance of the sales closing date.
XIV) Closing…Finally!
Usually, happens at the attorney’s or the mortgage lender’s office where you’ll be signing lots of documents. Read each one of them carefully. You’ll need to make a lot of payments like down payment, attorney fees, title search and insurance fees, recording fees and transfer charges, etc. You’ll be given a list of fees to be paid there. You’ll get the title deed at closing.
Finally, you’re now a New Jersey property owner officially!
RD Clifford Associates is a leading firm giving real estate and commercial property appraisal services and are very well known as New Jersey appraisers.
You can get the most accurate assessment of the value of your property after evaluating the real estate market in your area if there are any serious issues with your property like any structural problem, an estimation of how long it might take you in case if you wish to sell it and much more.
RD Clifford Associates has over 20 years of experience in providing real estate and commercial property appraisal services and other valuation services, and you can safely rely on them as your New Jersey property appraiser.