7 Stages of the Home Buying Process in New Jersey

These are the stages you need to know once you are officially in contract and your offer has been accepted. These quick explanations have broken down the process so it is manageable and predictable.

1. Attorney Review

Contrary to popular belief, you have three business days to get into the review process. The clock starts the moment the seller signs the contract. Once you hire an attorney, the timeline of the review could take anywhere from an hour to days. During this stage anything can happen; the seller could change their mind or another buyer comes in with a much better offer. There is no binding of the parties until you are officially out of attorney review. If you are serious and committed to buying the home, you should let your attorney know in order to push the process along. You want to finish as soon as possible to protect the deal.

2. Earnest Deposit Money 

Once you are out of attorney review it is time to put the money into an escrow account. Depending on the contract of sale, you may be writing a check to your attorney, the seller’s attorney or even your realtor. Keep in mind the contract of sale written up before attorney review may change and the due dates may be different after review. There are certain cases where the attorney review process is over and the earnest deposit money was due immediately. There have also been cases where the seller sets an allotted amount of time before the deposit is due. Be mindful of the fact that the original dates may have changed. As a buyer you may be at risk of losing the deal simply because they did not put the deposit money in escrow in a timely manner. 

3. Due Diligence

Typically the seller will give you between 5-14 business days to perform your due diligence. This means you have time to complete the home inspection and property sweep. It is vital that this stage is finalized to ensure there are no underlying issues with the home. You should be checking to see if there are potential oil tanks or abandoned septic tanks. Also part of the due diligence is making sure you have a survey so you are aware of your property line. You also want to do your due diligence as far as open permits. Open permits may affect the current or future sale of the home. Taxes should also be verified so what is posted on the MLS is accurate and you are prepared. With  new construction, oftentimes, the taxes you see listed are not the accurate taxes. They are based on the previous home which could have been smaller. Lastly, you make sure the home is not in a flood zone. Being in a flood zone can impact the price of the house and depending on the risk factor, you may be subjected to extra insurance fees. 

4. Appraisal

Part of every contract of purchase, if you are financing, is the mortgage contingency clause. This means the bank you are moving with is responsible for hiring a third party independent appraiser. The home will be appraised before you are given a firm and final mortgage commitment in order to ensure it is worth the value you will be paying. 

5. Mortgage Commitment 

This can be due anytime from 3 weeks to 30 days. That means the clock starts ticking as soon as you are out of attorney review. You have typically 30 days to make sure that the lender provides you with a firm mortgage commitment. If you or your lender feels like you need more time to get the commitment, your attorney must request an extension. Failure to do so could cause you to potentially be in breach of contact therefore running the risk of losing the deal.

6. Final Walkthrough, Transfer of Utilities, Ordering Insurance

In his stage your realtor will schedule the final walkthrough typically done the day before or the morning of closing. During the walkthrough you make sure the house is in the same condition as when you saw it before you made your offer. It is the seller’s responsibility to make sure that the home is free and clear of any personal belongings. The home should be in broom clean condition. Also during the walk through you want to make sure that the repair requests were completed. Once you have a closing date and time don’t forget to order the utilities. Part of the mortgage contingency for most lenders is a clause stating you will be providing proof of insurance. If the home is in a flood zone, you will need two types of insurance: homeowners and flood. 

7. Closing

You are now ready to become an official homeowner! During this step you are meeting with your attorney to make sure that all the terms of the mortgage, the closing costs, and the interest rates are correct. The deed will be transferred from the seller into your name. Congratulations on becoming a homeowner!