Be Prepared

1. Mortgage
2. Know The Home Buying Process
3. Locations
4. The Inventory
5. The Right Professionals

Buying a home can be a rewarding and fun experience if you follow the above steps. Eliminate any and you can easily run into trouble. Hopping into a car and looking at homes is the most frequent method people choose but it’s also the worst. Like anything else, you have to know what you’re doing first so that you can make the very best decisions for yourself.

As you read this guide, you will understand why it is so important to take the time to get prepared properly before you find your new home. It is to your advantage to have your mortgage banker, attorney and home inspector all selected in advance. I am assuming that you will also find a real estate agent to help you but this is up to you. You can certainly purchase a home without the help of an agent but you cannot without the help of those I’ve named above.

I think you will see that if you don’t have everything lined up in advance, not only will you be under a lot of pressure in the future but you won’t have the time to pick the best choices for yourself.

1. Mortgage
Qualify yourself properly BEFORE you look at homes and stick to your budget. When you speak to the mortgage banker, tell him/her how long you think you will stay in the house and describe your financial planning goals - these are critical factors. With this information, as well as other data, your mortgage banker can help you to choose the mortgage product that is best for you.

Only use a direct lender - a FDIC licensed mortgage bank. The other companies are mortgage brokers – they aren’t licensed and they go to other banks to get their funding. They are, essentially, a middleman. This creates added fees with no advantage to you.

Be careful of how you shop for a mortgage –too many credit inquiries can lower your credit score. The mortgage industry does understand that people shop around for a mortgage. However, shopping rates for months in advance is a mistake. There are so many things that affect your credit score. Even taking out a credit card for an extra 10% off at a department store sale day can spell disaster. A professional mortgage banker can advise you correctly.

Another mistake often made is to shop for rates – a company can advertise any rate if it shows up for one moment in the mortgage market with obscure requirements. Don’t let this fool you. If it’s too good to be true, it generally doesn’t exist.

What I tell everyone is this – Why would you choose the cheapest brain surgeon to operate on you? You know, the doctor with the big ad that says he operates for less than everyone else? Is that the doctor you want operating on your brain? This is your home but it is also your biggest investment; please be careful to choose fine professionals who have only your needs as their agenda.

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2. The Home Buying Process
A tremendous amount of stress associated with buying a home is easily eliminated if you just know what’s going to happen and when. Once you have found your home here’s what really happens:

1. You make an offer on a contract form (Realtor’s Contract) which includes a good faith deposit made out to the Agency’s trust account. The home’s street address is noted on the check.
2. Your agent presents your offer to begin negotiations with the seller.
3. If you and the seller agree on price and terms (what’s included,
   when you buy the house, etc), the seller signs and dates your offer and you now have a contract to purchase the house.
4. The contract is immediately faxed to both buyer and seller attorneys. This begins the Attorney Review process.
5. During Attorney Review, the lawyers fashion the contract for your particular situation. Once this is completed, the contract is binding.
6. The home inspection is done.
7. If there are any issues with the home inspection, this is negotiated through the attorneys. If you cannot come to agreement, the contract is cancelled; you get your good faith deposit back and the home goes back on the market. If you come to agreement then you move on to closing.
8. The full deposit is sent to the seller’s attorney to be held in trust and applied to your closing costs as is the good faith deposit.
9. The mortgage is finalized – appraisal ordered, etc.
10. If not already done, your attorney will order the title search and survey and prepare the necessary closing documents.
11. Your attorney will tell you what funds to bring to the closing.
12. On the way to the closing, you go to the house for a final walk through inspection to see if everything is as it should be.
13. You then go to your attorney’s office to first close on the mortgage and then close on the home.

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3. Locations

1. Choose more than one to consider.
2. Research thoroughly the town, schools, commuting and ambience.
3. Drive through the areas – see if there’s an emotional fit for you, if you like the feel of the town, the types of homes there, how it looks.
4. If you use an agent, refuse to work with one who won’t do this extra work for you – it’s extremely important to pick the right location. You can change the house but not the town.

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4. The Inventory

1. Learn the inventory – see homes and take your time doing so.
2. Ask your agent to send you market data - what’s for sale, what’s under contract and recent sold listings in your areas of interest.
3. Have your agent give you the background on any home that interests you. This includes the listing history, tax map and flood map checks and anything else your agent can find.

Your objective is to learn the inventory well enough to be able to have a good sense of the market values. You will also want to get as much information as you can on any home that interests you. How long has it been on the market? Was it a rental property before being put up for sale? Such things come from the listing history. You can never have too much information.

As you look at homes, you will discover what you do and do not like in a home. Keep an open mind – its not at all unusual for you to change your mind from what you first thought would be ideal. It’s really a learning process.

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5. The Right Professionals

1. Mortgage Banker
   Only a FDIC mortgage bank and only a licensed mortgage banker.
    
2. Attorney
   Only an active member of the NJ State Bar Association. If you think of NJ as Wyoming, NY as Delaware and Connecticut as California, you’ll understand that these are 3 different states with 3 different legal systems so a NY attorney cannot automatically close on your NJ home.
   
   Only an attorney who does a large amount of residential sales in his/her practice. Commercial real estate is radically different. Your attorney must be experienced in what you need.
   
   Call several on the phone. Most of what you do is by telephone so you need to have a good rapport with your attorney over the phone. It doesn’t matter if the attorney was #1 on the Harvard Law Review if he/she can’t understand your needs. Communication is key.
    
3. Home Inspector.
   Only one who is licensed by NJ and whose sole business is inspecting homes. Most have websites you can research as well. Check with your attorney for suggestions. You will want to do a structural, pest and radon inspection plus anything else that is a concern for you. Have your Realtor check on any company you choose to make sure that they are on the NJ State approved list.
    
4. Real Estate Agent
   What should you expect from your agent?
   • Complete loyalty and the very best service possible.
   • Good communication is crucial – if you and the agent can’t understand each other, find another agent.
   • A real estate agent should be your strongest advocate and your best source for information and guidance.
   • A good agent takes the extra time to prepare and educate you so that you can make the best informed decisions for yourself.
   • A good agent should also be able to anticipate your needs and help you with future needs as well such as helping you to organize your move and make your transition to your new home easier.
   • Unless faced with a bidding war, a good agent should never make you feel unduly pressured.
   • Sometimes the agent who sells the most houses gives the worst personal service; ask for references.

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