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Alan Krohn
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Home Buying Process in New Jeresy:

Congratulations, you’re on your way to buying a home! You may have heard that it can be a complex, confusing process. In the following, I hope to make your purchase easier with a preview of what to expect and how best to get organized and prevent any surprises.

How Much Can I Afford?

Everyone would like to live in one of the homes we see on TV. Maybe we can, but first we need to determine how much it will cost. Contact a Mortgage Representative to help you calculate your possible loan payments. She or he will look at your FICO (Credit Score), current obligations and employment status to get you a loan tailored to your needs. You will then be Pre Approved or Pre Qualified for a loan. The letter stating your status will be used to convince a seller you are a qualified buyer.

Now is a good time to determine how much of a down payment you can afford. Your Mortgage Rep can give you an idea of how much you’ll need for closing costs. Among the costs are: Attorney’s Fees, Home Inspection Fee, and payments for items related to your mortgage such as Application Fees, Survey and Appraisal Fees. These costs can add up and it is best to know the possibilities to avoid unexpected check writing.

Don’t be afraid to ask questions now so your planning can go more smoothly.

Let’s Shop For A Home!

OK, now that you know what you can afford, it’s time to find that perfect home. There are many questions to answer. What area? What schools? How many bedrooms? How many bathrooms? Basement? Garage? Pool? Knowing all of this ahead of time will help me search our computer listings to find just the right home.

We’ll get a list together and go out and see some homes. Bring along tools to take notes. You may want to bring a camera, just to remind you of certain features. After looking at more than 3 houses, it can get confusing!

Once you decide on a specific home, it is time to do some detective work. When you buy a home, you’re buying it “As Is”. Many people say they can’t determine the condition of the property just by breezing through. No problem, we have an answer. The Seller should have prepared a Seller’s Disclosure form. I’ll supply that to you. On the form you’ll find the history of the home, such as the age of the roof, furnace, hot water heater and other high cost items. The Seller will disclose any major repairs completed as well as information on existing service contracts and termite treatments. Later in the process, you will be consulting with a Home Inspector who will verify the home’s condition.

Time To Make An Offer

You did it! You found the right home to buy. Now you need to determine what price to offer. I can help you by showing you comparative sales of similar homes in the same area. Those facts, along with what you’ve learned from seeing the home and reading its history in the Seller’s Disclosure, will set your offering price.

I will write a Contract of Sale. This will identify you, the Seller, and the details of the home. We need to know what is included (Appliances, Ceiling Fans, etc.) and what is excluded (Chandeliers, Personal Property, etc.).

The Contract will spell out financial details such as:

• Initial Deposit; Generally a minimum of $1000. This will be a check you write at the time of signing the Contract.
• 2nd Deposit; Usually about $4000, this will be paid about 2 weeks after the Contract is signed.
o Note: Deposit amounts are variable, these figures are typical.
• Mortgage Details; Here, we will identify the amount, interest rate and points you consider appropriate for you.
• Final Payment; This will be the amount you will need to bring to closing to complete your down payment.

The Contract will also identify a target closing date. Generally, if you are getting a mortgage, we should plan on 45-60 days after the Contract date.

Now is the time to point out any special requirements. These may include a Contingency of the sale of your current home or other conditions.

After the Contract is filled out, I will read through it with you explaining the details. You will be asked to initial each page and sign the final page, agreeing to the Contract’s conditions.

Now it is time to identify another team member, your Attorney. She/he should be a local attorney. They will protect and guide you through the sale up until Closing.

Negotiating The Final Price

After we finish the Contract, I will forward it to the Seller’s real estate agent for presentation. The Seller will look at the price offered as well as your Deposit amounts and projected Closing Date. The Seller may make a Counter Offer. The other agent will relay it to me and I will inform you. We will go back and forth until you and the Seller agree to a final price. Once we have that, I’ll modify the original contract. I’ll ask you to review the Contract again and initial any changes made from the original.

Attorney Review

After the Contract is signed and initialed by both sides, it is sent to your Attorney and the Seller’s Attorney. They will have 3 business days to iron out any differences regarding the closing date, or any other conditions in the Contract. During this time, either you or the Seller can change their mind and void the Contract for any reason. Once the Attorneys agree on everything, they notify each other, you, the Seller, and me that review is complete and you are now “Under Contract”.

Home Inspection

As spelled out in the Contract you have the right to hire a qualified Home Inspector. This can cost anywhere from $250-$600, depending on the Inspector. You will need to pay for this at inspection time. Many Inspectors ask you to meet them at the home, so you can pay then.

The Inspector will prepare a detailed report for you and your Attorney. If there are any areas of concern, your Attorney will alert the Seller’s Attorney. The lawyers will work together to agree on solutions to correct any defects.

Mortgage Processing

You should have kept in contact with your Mortgage Rep. Your Rep will get into the details of loan processing. They will be asking for documentation of finances, credit and employment to finalize your application. They will inform you of Appraisal Fees, Surveys, etc. The Rep will supply you with a Good Faith Estimate which will help you prepare for closing costs.

Mortgage Commitment

This is it! When you receive the commitment from your lender you are almost in your new home. The commitment shows that the lender has the funds ready for closing and they just need to write the check for your new home.

Final Preparations

It is time to contact your Insurance Agent. You will need a prepaid one year Homeowner’s Policy. You will need to supply a copy of the policy to the Mortgage Rep.

Since you know the Closing Date, it is a good time to contact utility companies. I can give you phone numbers to call for electric, gas, phone and cable companies.

Arrange for movers to get you into your new home.

Closing Day

The morning of Closing Day, we need to do our final walk through of the home. We should ensure all items to be included are still in place. The home should be “broom clean”. All utilities should be functioning properly, water, electric, heat and air conditioning (if possible).

The Closing will probably be at your Attorney’s office. He/she will already have sent you an estimate of how much money you’ll need to bring. You will probably need to go to your bank to get certified checks. Be prepared to sign, sign, sign and the sign again!

Alan Krohn
Crossroads Realty
168 Route 37 West
Toms River, NJ 08755
Cell/Text 732-245-1642
Office: 732-244-2200

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