The real estate closing process in New Jersey is a fairly straightforward procedure that follows four major steps–attorney review, inspections, the mortgage process, and the day of closing. As with any major purchase, it can be a lengthy process, usually taking 30 to 45 days in total–but this number can vary in either direction depending on a number of factors. We’ll take you through a standard NJ real estate closing.

Attorney Review

Once an offer has been submitted and accepted, the contract goes through attorney review. This is the 72-hour period in which both the buyer’s and seller’s attorneys pore over the contract and make changes as they see fit if agreed upon by both parties. During this period, either party can back out of the contract without any penalty.

Before a house goes into attorney review, the buyer submits an earnest money deposit, often called a “good faith deposit” in order to show their intent to purchase is legitimate. The amount of the good faith deposit varies with each situation.

Following the conclusion of the 72-hour attorney review process, the contract is legally binding and the buyer moves onto inspections.


NJ home inspection

While home inspections are not legally required in New Jersey, you will almost never find yourself in a situation that doesn’t call for an inspection. They are strongly recommended for any buyer in order to gain valuable insight into what they’re purchasing–the inspections can include general home inspections, termite inspections, radon testing, asbestos inspection, and more. These inspections must be completed by an agreed-upon date outlined in the contract.

Any additional repair costs that a buyer would incur based on information disclosed by an inspection can be transferred to the seller if both parties agree. If the seller refuses to take on any additional costs related to repair, the buyer is permitted to back out of the contract, and in most cases, get their good faith deposit refunded.

There are a number of other documents that may be required based on the property, such as well testing if there is a buried well, oil tank scans, septic certification, or certificate of occupancy.

Mortgage Process

The most delicate stage of buying a house is also the one that can take the longest. The process of getting approved for a mortgage should be started as early as possible, usually at the same time as attorney review. Buyers can submit for mortgage pre-approval in order to show sellers they are in good financial standing prior to submitting an offer.

Submitting an application to a lender includes a laundry list of financial disclosures, such as bank statements, outstanding loans, two years of tax returns, contact information for their employer, and any other financial considerations other than income like child support payments or cash gifts.

Before a loan commitment letter is sent, the lender will schedule an appraisal of the property to make sure it is worth the purchase price. If it is worth significantly less, the lender may decline the mortgage unless the purchase price is changed to meet the appraisal.

If the lender agrees to approve the loan, a loan commitment letter is sent to the buyer agreeing to fund the mortgage so long as the lender’s terms are met–once the borrower has a firm commitment from a lender, an initial title search is conducted.

Finally, the buyer must purchase title insurance and homeowners insurance to send proof to the lender.

While going through the mortgage process, it is imperative that the buyer doesn’t change jobs or do anything that could significantly affect their financial status–it can complicate an already lengthy process that might result in your contract being voided.

Some contracts include a Mortgage Contingency Date, which is the date by which the buyer must have an approved mortgage in writing from a lender. If a mortgage is not approved by that date, the seller may back out of the contract and pursue other offers.

Day of Closing

Once it’s time to close, a final walkthrough takes place to ensure nothing has changed in the home before transferring ownership to the buyer.

Then comes the easy part–the buyer and seller meet to sign all related documents that transfers ownership to the buyer, and a second title search is run to make sure there are no issues that would affect the value of the property and that the seller is the rightful owner. If there are no issues, the keys are handed over and the buyer is a new homeowner.

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