NJ Home Buyers Guide – Essential Steps

Home Buying Process

The home-buying process in New Jersey typically involves several distinct stages, including an "Attorney Review" period that is unique to the state's real estate transactions.

Stage 1: Preparation and Financing

1

Examine Your Finances

2

Get Pre-Approved for a Mortgage

3

Find a Real Estate Agent

Examine Your Finances

Review your income, debts, and credit report, fixing any errors before applying for a loan.
Determine how much you can comfortably afford for a down payment and monthly payments.
Calculate your Debt-to-Income (DTI) ratio, as lenders prefer a back-end DTI (including all debts and housing expenses) below 36% and a front-end DTI (housing expenses only) no more than 28%.

Get Pre-Approved for a Mortgage

Pre-approval (where a lender checks your finances and commits to a specific loan amount) is essential—do not confuse it with a simpler "pre-qualification".
Shop around and get quotes from at least three different lenders (banks, credit unions, and online lenders) to compare rates, fees, and loan terms.
Inquire about various loan types (Conventional, FHA, VA) and any down payment assistance programs available.

Find a Real Estate Agent

Find a Real Estate Agent (REALTOR®)

Select a Real Estate Agent who is knowledgeable about your target neighborhoods and has experience working with buyers.
The buyer is responsible for negotiating the buyer's agent commission rate with their agent.
Sign a buyer representation agreement that outlines your agent's duties.

Stage 2: Searching and Offer

1

Start the Home Search

2

Make an Offer

3

Negotiations

Start the Home Search

Communicate your essential and optional home features to your Real Estate Agent (e.g., price range, towns, number of bedrooms/baths).
Your Real Estate Agent will set you up with listings from the Multiple Listing Service (MLS).
Identify key factors for your preferred location, such as commute time, school quality, amenities, and crime rate.

Make an Offer

Work with your REALTOR® to determine an appropriate offer, which should be submitted to the seller on a REALTOR® standard form of contract.
The offer should include the purchase price, a closing date, what items are included/excluded, a financial contingency (mortgage), and a good faith deposit (often $1,000 in the initial offer).

Negotiations

Negotiations on price and terms take place between the buyer and seller, usually through their agents.

Stage 3: Attorney Review and Contingencies

1

Attorney Review

2

Home Inspection

3

Second Deposit & Mortgage Application

Attorney Review

Once the contract is signed by both parties, it is sent to the attorneys. The contract is legally binding unless a lawyer cancels it within three business days.
During this period, the buyer's and seller's attorneys review and approve, disapprove, or modify the contract.

Home Inspection

After the attorney review is complete, the contract is officially "Under Contract." You typically have a set number of days (e.g., 10 days) to complete your home inspection.
The inspection should include the entire house (structural, mechanical, electrical, plumbing) as well as any other necessary testing like radon, wood-destroying insects (WDI), and in some cases, a septic tank or underground oil tank sweep.
Inspection issues are negotiated between the attorneys and are typically limited to major structural, mechanical, or environmental items.

Second Deposit & Mortgage Application

A second, larger deposit (which can be a few thousand dollars up to 10% of the price) is typically due shortly after attorney review and is held in a trust account.
You must formally complete your mortgage application and work to secure a commitment from your lender by the date specified in the contract.

Stage 4: Closing

1

Appraisal, Survey, and Title

2

Final Walk-Through and Closing

3

Second Deposit & Mortgage Application

Appraisal, Survey, and Title

Your lender will order an appraisal to ensure the home is worth the purchase price.
Your attorney will order a survey and a title search to ensure the seller has the right to sell the property and there are no unexpected liens.
Obtain a Homeowner's Insurance policy (sometimes called a "hazard" policy) and, if required, a separate Flood Insurance policy, naming your lender as an insured party.

Final Walk-Through and Closing

A few days before closing, ensure all utilities are set to transfer into your name.
You and your agent will perform a final walk-through to confirm the property is in the agreed-upon condition.
The settlement agent will prepare the Closing Disclosure (CD), detailing all funds to be exchanged.
At the closing table, you will sign the final mortgage documents and the deed transfer, and the keys will be handed over, making you the homeowner.

Second Deposit & Mortgage Application

A second, larger deposit (which can be a few thousand dollars up to 10% of the price) is typically due shortly after attorney review and is held in a trust account.
You must formally complete your mortgage application and work to secure a commitment from your lender by the date specified in the contract.

Buyer Closing Cost

Buyer's Chart for Tracking Closing Costs

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Buyer's Guide

Home Buying Process