Financing a Home as a Single Parent: What are my Options?

home ownership

Being a single parent isn’t easy. There are many unique financial challenges single moms and dads face as a one income household. For many single parents, buying a home can truly seem like an impossibility. But don’t give up on your dream of homeownership just yet. There are plenty of loan and assistance programs single parents can take advantage of, you just need to know where to look. In New Jersey, there are many state and federal assistance programs for home buyers with specific circumstances. While none of these categories explicitly list “single parents,” they can be a great benefit for those looking to buy a home with one income.

HUD 

One of the best places for single parents to start their home search is the U.S. Department of Housing and Urban Development (HUD). Contacting your local New Jersey HUD office can give you access to resources that will help you find housing options as well as demystify the home-buying process. A HUD housing counselor can fill you in on local home buying programs you might not be aware of or help you obtain a loan. Some single parents may also qualify for subsidies and extra assistance that will help you afford decent housing (depending on your income and employment).

FHA

Federal Housing Administration (FHA) loans are popular for many first time home-buyers, including singles on their own as well as single parents. FHA loans are government insured and easier to qualify for than other similar loans. There are many benefits associated with FHA loans that make them appealing to single parents, including a 3.5% down payment, lower credit score minimums, and low monthly mortgage insurance rates. FHA loans are also flexible about how a first-time homebuyer is defined. If you are recently divorced or become a displaced homemaker, you can qualify as a first-time homebuyer as long as the only residence you’ve ever owned was with a former spouse.

VA

Veteran Affairs (VA) loans are also an excellent resource for single parents. If you are a single service member, a veteran, or the surviving spouse of a veteran, you could be eligible for VA loan programs. There are a number of benefits for qualified buyers, including waived down payments and mortgage insurance, low-interest rates, and on-going support throughout home ownership. If you are facing foreclosure, the VA can step in to help you keep your home or find a new residence. In the event of a work-related disability, there may be additional Veteran’s benefits you can take advantage of.

USDA

The United States Department of Agriculture (USDA) offers a few different programs for low- and moderate-income home buyers in rural areas. Even if you aren’t sure that you live in a “rural” area, the USDA’s programs are still worth looking into. Many of the regions where programs are offered are located just outside major cities. USDA loan programs offer low interest rates and zero down payment options. Qualified borrowers can get 100% financing and the mortgage insurance premium is one of the lowest offered in any program. USDA loans do have an income maximum, but most single parents do not meet this maximum.

Private Lenders

Some private lenders will offer loan programs for single income borrowers. These custom loan programs can cater terms to your specific needs to help ensure that loan applicants get pre-approved for a mortgage. These custom loan programs can include help with your credit score or assistance with your down payment, among other things. While not all lenders will offer these kinds of programs for single parents, it is worth looking into as you begin your home search.

 

As a single parent, you aren’t limited to these programs. Your county, city, or even township might offer their own programs to help the single parent home buyer. Don’t lose hope in your dreams of owning a home. If you would like help getting started or with the application process, Veitengruber Law is more than happy to help you get on the path to home ownership!

 

 

 

 

 

 

 

The Multiplier Effect: What it Means for You in 2020

multiplier effect

In 2020, as you consider where and how to spend your hard-earned paychecks, there’s one economic force we at Veitengruber Law would ask you to consider: The Multiplier Effect.

Why exactly is it that money must be spent locally to benefit the community? In short, it boils down to the multiplier effect, which states that each dollar spent has an impact that is greater than the original sum.

For example, if you were to visit a New Jersey locally-owned hardware store to purchase a new door for your home rather than choosing to order from a big-box chain, the money you spent will allow that store owner to earn profits and pay a local employee, who will likewise spend money in the community, hopefully at another local shop, thus multiplying the positive impact of the original amount spent.

In this way, each dollar spent locally has the potential to send positive economic reverberations throughout the region, and will continue to do so as long as the majority of cash earned continues to circulate locally.

When we think about cities and towns in NJ that have gone from thriving and vibrant to economic wastelands, it is evident that these communities lack local investment. Without local businesses and investors reinvesting their wealth, the very infrastructure supporting the community fractures and collapses.

In order to avoid such conditions, businesses and investors alike must commit to the local communities that support them. By the same token, consumers can maximize the impact of every dollar spent by finding local businesses to support.

What will the multiplier effect mean for you as a New Jersey resident in 2020? Should you cancel your Prime account and forego the convenience you gain as a modern citizen of a global economy? Of course not. There are, however, ways you can spend locally without having to restructure your life.

First, if you’re in the fortunate position to have the capital to purchase an investment property in the new year, consider looking nearer to home rather than just shopping for the best bang for your buck. Not only will doing so encourage additional investments – people can’t invest money they don’t have, after all – but it will also improve the New Jersey landscape by ensuring property development continues to happen right here where we live.

Furthermore, every dollar spent in New Jersey is not only just earned and re-spent, but it is also taxed! Consider that cash spent locally can be taxed repeatedly – nearly indefinitely – until someone in that cycle breaks the chain by spending the money elsewhere. Tax dollars are absolutely essential to the establishment and maintenance of vital community services: schools, libraries, parks, and public transportation are just a few of the most beloved public services, none of which will survive without a steady stream of local spending.

What if you’re a first-time home buyer rather than a big-shot investor? Are the dollars you spend really going to have a significant impact, or does massive impact only accompany huge property investments? The answer couldn’t be clearer.

In the calendar year 2019, if we only consider NJ buyers who purchased new homes, they will have splashed out more than two billion dollars. When the National Association of Home Builders crunched the numbers, they calculated that the multiplier effect of such an astronomical sum would account for the creation of nearly four million local jobs, over $180 million toward wages and income of those workers, and $225 million in revenue for local tax funds.

Furthermore, this two billion will still be positively impacting the community after 12 months! Clearly, if we want our incomes to sustain, nurture, and grow the very towns in which we live, we have to commit to spending, investing, and hiring locally whenever possible.

If this article has sparked you to action, and 2020 will be your first year focusing on keeping your money circulating here at home in NJ, we couldn’t be more delighted. Here are easy-to-use resources to get you started:

 

 

You’re Ready to Move in New Jersey – But is Your Dream Home Move-in Ready?

When you’re buying a house, unless you’re into flipping investments or you crave big DIY and home renovation projects, you probably just want to unpack all your boxes and start enjoying your new “home sweet home.” But before asking your real estate agent to show you “move-in ready” properties, you should be aware of what that phrase actually means.

It turns out that, like beauty, “move-in ready” is in the eye of the beholder. To you, it might mean everything not only works, but it also matches your style, right down to the door knobs and paint colors. To a lawyer using Black’s Law Dictionary, though, it simply means that the municipality has approved the property as a place approved for people to live – the plumbing and electricity are up to code, the windows and doors lock, and no pesky pests are creeping around within. And yet, to the seller, it could mean the kitchen was recently remodeled – but there’s only one tiny bathroom, and the living room still sports ‘70s orange shag carpeting in passably good condition.

So rather than get tangled in terminology, here are five things to keep in mind when you’re doing a walk-through on that “move-in ready” property.

  1. Start at the Bottom: Flooring
    You may have opinions on whether you prefer carpet or hardwood, but regardless of what is on the floor, make sure it’s a solid base for your new home. That means no peeling tiles, no ripped or odorous carpeting, and no ominous creaks. And here’s an insider tip – bring a marble to place on the floors along your tour. If it rolls a lot, the floors may be uneven, indicating potential issues with settling or even the actual foundation.
  2. Plumb the Depths: Kitchens and Bathrooms
    Though a stainless-steel refrigerator, granite countertops, and a double vanity may be high on your “must-have” wish list, what makes a house move-in ready is ovens and dishwashers that work and toilets that flush. Make sure the faucets don’t leak and the water pressure is good. Ask about the capacity and age of the water heater and any pumps to be sure they can handle your family’s needs. (Most water heaters should last eight to 12 years.) Poke around the cabinets to see – and smell – that there’s no water damage or mold hidden among the pipes, and that nothing is rusted. Taste the water – if you move in, you’re going to be drinking it for a long time!
  3. Don’t Be Shocked: Electric
    Check the wiring to be sure your hot property isn’t a fire hazard. Confirm with the seller’s agent that everything associated with the electrical current is indeed current and meets the local codes. There should be no archaic knob-and-tube wiring in the walls, the breaker box should be powerful enough to handle the load, and the outlets and switches should all work without any issues.
  4. Take Comfort: Heating and Cooling
    Pause during your house tour, and just breathe. Are you too warm? Too cold? Or, like Baby Bear, do you feel “just right?” Ensure that there’s proper insulation in the attic and around the heating ducts and water pipes. Find out how old the furnace and HVAC systems are, too; their average lifespan is about 15 years.
    Make sure the windows open and close easily, and whenever possible, look for double-paned windows for the double benefit of protection from both temperature and noise.
  1. Think Outside the House: Roofing and Siding
    Don’t go through the roof – figuratively or literally. Find out how old the roof is; a roof typically lasts about 20 to 30 years depending on what it’s made of and what climate it has faced. Do at least a visual check for leaks, loose or missing shingles, or areas where the structure might be sinking a bit. Similarly, examine the siding and window frames for discoloration or warping that could indicate not simply water damage, but also underlying mold and other costly concerns.

 

You should always engage the services of an experienced home inspector to thoroughly examine these and other elements of the property to be sure your dream home doesn’t turn into a nightmare. And whether your house hunt takes you to New Jersey’s friendly southwestern suburbs, its gorgeous northern mountains, the bustling outskirts of New York City, or those sunny beaches down the shore, Veitengruber Law can help with title searches, title insurance, and due diligence to help you turn that “move-in ready” house tour into a “we’re really moving!” experience.

 

When is it a Good Idea to Buy a Foreclosed Property in NJ?

NJ foreclosure

Since the housing market collapse of 2008, New Jersey has had the dubious distinction of leading the nation in foreclosures. For a variety of reasons (divorce, loss of income, disability, etc) people in NJ are still struggling to make their mortgage payments and stay in their homes over a decade later. Navigating the foreclosure market is wrought with pitfalls and potholes. However, contrary to popular belief that buying a foreclosure property is always bad news, there are actually a few occasions where investing in a foreclosed home can be a manageable and economical option.

 

1. You know the neighborhood.

Things happen to a house that sits vacant. Without heat and air conditioning running, a house gets exposed to moisture and rot. Without people around to fix things as they break, leaks spring up, wires fray, appliances rust. Animals bore holes in siding and chew through electrical wires. Criminals may break in and steal copper pipes and appliances, or use the property for drugs. Squatters make themselves at home and don’t clean up after themselves. These are some of the things you can expect when buying a foreclosure. But you can stem some of that tide by knowing the property and its owners.

A house in a good neighborhood is watched more carefully than a house in a neighborhood with a high crime rate. Check the local crime reports and see what the town history is. Are there police patrols in the streets that would deter criminal activity?

Neighbors would also have a vested interest in keeping up the foreclosed property for their own property values. They may occasionally mow the lawn to prevent overgrowth, weeds, and ticks. If an abandoned swimming pool was attracting mosquitoes and wildlife, they would report it to the town. Invested neighbors will do some of the work of keeping up a property for you.

 

2. You plan to tear down the house.

If the land is valuable and you plan to tear down the house anyway, buying a foreclosed property can be a great deal. You don’t have to worry about hidden repair costs if you’re ripping everything out and starting fresh. Land in New Jersey is at a premium, so if there’s acreage involved, a foreclosure may be your best option.

 

3. It’s not your primary home.

The foreclosure process can take years, and even toward the end can fall through. The legal system has protections in place to try to get the homeowner to remain in their home. They have various recourses to take up until the last day, and even then may try to regain their house. If you are trying to purchase a foreclosure as your primary residence you could be tied up for a long time without a home. It’s best to look at foreclosures when you have time to plan. Second homes or investment properties are usually a better fit.

 

4. You’re experienced in investment properties.

If you’re looking to be the next HGTV house-flipping star, it’s a bad idea to start with foreclosures. Build up a solid background of investment properties bought with traditional mortgages first. You’ll become experienced in uncovering structure issues, but usually not on the scale of what you can find in a foreclosure. As you earn stable profits, you’ll be able to afford the risk of a foreclosed property. At that point, even if you make a bad investment, it won’t bankrupt you.

 

5. You get to a property early in the process.

There’s a good chance you won’t be able to perform a home inspection if the foreclosure is being sold at auction. Without a home inspection, you will be going into the purchase totally blind. You may be able to bypass an auction altogether if you get to the homeowner during the pre-foreclosure period. The buyer may be receptive to a reasonable offer and you’ll be able to perform home inspections to uncover any potential problems.

 

6. You have an experienced real estate attorney.

An experienced attorney like George Veitengruber can help you determine if a foreclosure property is the right investment for you. Veitengruber Law can perform a title search on the property and discover if there are any outstanding liens. When you purchase a home at auction you are inheriting property liens, so you want to make sure you know what you’re getting into.

If you’ve decided that a foreclosure is a good investment for you, Veitengruber Law can also help you prepare for the auction as well as attend the auction with you. All the paperwork needs to be ready in advance including your deposit, which is nonrefundable in NJ. If you are ready to accept the risk, a foreclosed property could be your way to a big reward.

How NJ Title Insurance Protects You from Hidden Ownership Hazards

When purchasing real estate in New Jersey, it is imperative that buyers take care to familiarize themselves with the lengthy checklist of steps that must be completed throughout the process of purchasing a home. Neglecting to do so can result in delays, missed deadlines, or additional fees.

One of these important tasks is purchasing title insurance. However, if buyers encounter this fee as an unexpected add-on, they may resent it, or even wonder if title insurance is necessary at all. Of course, title insurance is necessary because it provides a financial shield against a slew of potential pitfalls, even title-related issues that could crop up down the road.

Questions related to title insurance often include:

Before the closing date, there is going to be a title search. What does that mean?

The party listed on a home’s title is the rightful owner of the property. When your NJ real estate attorney or the title insurance company performs a title search on a property before the sale, they are attempting to find anything in the home’s history that could become problematic when it’s time to transfer the title.

This is a preliminary examination, but it is quite thorough. Records commonly examined include divorce agreements, judgments, liens, tax records, trusts, wills, and yes, deeds. If there is an obstacle that is fairly minor (remaining liens, clerical errors, or missing signatures), it can often be quickly remedied. In such cases, a sale can usually proceed unencumbered.

The initial title search was clear. Do I still need title insurance?

Even when a title search is initially clear, it is nearly impossible for even the most thorough of title searches to fully eliminate the potential for future conflict. A contesting claim can be filed for a number of reasons, including clerical errors, newly-discovered family connections, and estate planning mistakes. Unfortunately, such a claim could crop up at any point – even years after you’ve closed on the home.

Additionally, all reputable lenders will require you to secure title insurance before they will even consider your mortgage request, and NJ real estate attorneys simply won’t represent you if you are unable to secure it. No attorney wants to take on a client who has left themselves so vulnerable to unpredictable future events.

Title insurance can sound superfluous at first, but clearly, it is an absolutely essential cog in the machinery of actions that represent responsible, successful home ownership.

What does title insurance cover?

A standard owner’s title insurance policy normally protects you financially in the event of any of the following:

  • Displacement by a contesting claimant
  • Forgery and fraud with regard to prior documentation
  • Clerical or typographical errors
  • Mistakes on records or in methods of record-keeping
  • Outstanding liens or legal judgments
  • Restrictive covenants, i.e. easements that have been undocumented

If something goes wrong with the title years from now, how can title insurance help?

Your policy will be your safety net, even if a long-buried issue crops up down the line and presents a valid obstruction to your ownership.

Now, a long-lost party can still take a claim to the courts; if they happen to win ownership of the property, your policy will pay off the remaining balance on your mortgage. If you have also taken out a homeowner’s insurance policy, that will be activated as well, so that some – or perhaps all – of the money you’ve invested (i.e. down payments and mortgage payments) can be recovered.

What is the total cost of title insurance?

The lender’s policy will cost a one-time initial cost of roughly $1,000. An owner’s policy costs less than $100. Even if you never file a claim against your policy, though, this is still money well spent.

Why? Because on the (admittedly small) chance that a missed claim does crop up and catches you without title insurance, you stand to lose a large sum of money as well as the home you’ve fallen in love with.

Who should I speak to about purchasing title insurance?

Your escrow or closing agent will pursue title insurance for you once your purchasing agreement for your new property has been completed. Feel free to reach out to us at Veitengruber Law if you have questions about title insurance, title searches, or any other aspect of the New Jersey real estate process!

 

Can a NJ Seller be Sued for Undisclosed Defects in the Home?

caveat emptor

When selling your home in New Jersey, “Caveat Emptor” (Buyer Beware) is the main tenet applied. The seller also has an obligation under common law to properly represent the property. If the seller fails to honestly represent the home for sale, they open themselves up to the probability of legal actions. Because we know this is an area of NJ real estate law that can easily be misinterpreted, Veitengruber Law always works hard to ensure that our clients understand their responsibility as a New Jersey real estate buyer or seller.

New Jersey courts have ruled in favor of misled buyers.

While the law is not specific, the courts have heard numerous lawsuits and ruled in favor of buyers when they have been blatantly misled by the seller. In New Jersey there is an “implied warranty of habitability.” This means that the seller is expected to disclose anything that can affect habitability of the home, and includes things like: drainage problems, hidden mold, roof leaks, poorly insulated walls and windows. Was the house ever tested for Radon? Hiding these types of things from potential buyers could bring about a lawsuit after the sale.

NJ real estate contract review is crucial!

There are good reasons to use both a real estate agent and a NJ real estate law firm like us when buying a house. Even the most basic real estate contract includes a laundry list of items that any buyer would expect to be included or corrected before they agree to purchase a property. All improvements and construction should be valid and up to code. This will ensure a Certificate of Occupancy (CO) can be obtained from the local municipality. You cannot move into a house without a Certificate of Occupancy.

KEY TAKEAWAY: Buyers should be sure that qualifying for a CO is written into their real estate contract, and every contract should be thoroughly reviewed by a real estate attorney. At Veitengruber Law, we work closely with many home inspectors to ensure that a full property inspection is completed before our clients sign any paperwork.

Undocumented improvements can lead to problems

Sometimes homeowners make improvements without securing the proper permits and inspections. This potentially means that if the situation comes to light before, during, or after the sale of the home, the municipality can levy fines and charge back taxes. Who is financially responsible for these fees depends  upon when the situation is discovered.

A house with a bad reputation?

There is no official requirement to disclose things such as a tragic event that occurred in the home, like a crime, murder, or death of natural causes. While sellers don’t have to offer up this information, they do have to respond truthfully if asked if an event of this nature has occurred in the home or on the property. If a seller blatantly misrepresents what has taken place in the home, the buyer can sue for relief.

As the buyer, you are spending a great deal of your money for the house of your dreams. You will likely spend many years living in the home, and you may even raise a family there. BECAUSE there are no solid laws requiring the seller to disclose the home’s “past,” it’s important that you do your due diligence. Research all available information and secure your situation with the expert representation of Veitengruber Law.

Should You Buy a Fixer-Upper?

fixer upperWith the success of popular HGTV shows like Fixer Upper and the prominence of DIY house projects, purchasing a fixer-upper is a common dream for some potential home buyers. Fixer-upper properties are often lower-priced while offering the opportunity to greatly increase the value of the home far beyond what the buyer paid for it. At the same time, fixer-upper properties can sometimes be more work than people think they will be. The final product may not be worth the time, effort, and money it took to get there. So how can you tell if buying a fixer upper is the right move for you?

A lot of factors go into determining if the fixer-upper you are looking for is a good investment. Fixer-uppers can offer ample opportunity for creativity, personalization, and savings. But they can also come with costly renovations, increased risk, and a monopoly on your time. Ultimately, whether or not you should buy a fixer-upper comes down to you and your unique circumstances as a home buyer. Here are some ways to decide if you have what it takes to buy a fixer-upper:

1. Are You Ready For the Work?

Doing all the work needed to bring your vision for a fixer-upper to life is time consuming and stressful. It is a huge undertaking even for the savviest DIY enthusiast. There is a reason many home buyers will spend the extra money for a newly renovated and updated home. The price tag of a fixer-upper might not seem worth it after you calculate the cost, time, and labor you will have to put into the home after purchase.

The commitment required of your time and energy is no small order. If you’ll be doing the renovations yourself, you need to be up to the physical task. If you are hiring professionals for the renovations, you will still need to be on site regularly and be able to take the time to shop for materials and appliances. The work can quickly become overwhelming, so make sure you are prepared.

2. Are You Connected?

When it comes to home renovations, hiring the right people can make or break a project—and your bank account! Time is money with contract work. Do you know trustworthy professionals to help you achieve your vision? Knowing architects, contractors, project managers, and other people in the construction business can be a major leg forward for your project. If you do not know anyone personally, ask trusted friends or family if they know any reliable project managers or general contractors. These professionals can make the renovation process more efficient and cost-effective for your bottom line.

3. Where Will You Live?

Are you prepared to live in a construction zone for months on end? Alternatively, if your renovations don’t allow you to live on site (if you’re gutting your bathroom, for instance), are you financially prepared to maintain two residences simultaneously? Make sure you look into all of your options. If a close friend or family member has room for you nearby, you could save money by bunking with them throughout the reno project. Finding an economical rental is also a good option if you cannot live in your new property while it is being renovated.

4. Do You Have the Vision?

Sure, it looks easy when Joanna and Chip Gaines do it on HGTV, but bringing a housing vision into reality isn’t something everyone is capable of doing. Getting a realistic mental image of how you want your home to look and then explaining that vision to the professionals helping you can be difficult. Some creative preferences and ideas can get lost in translation, leaving you with something you didn’t exactly want. A lot of creativity goes into renovating a home. Make sure you have thought through your ideas before you sign the dotted line for a fixer-upper.

A fixer-upper can be a fantastic investment opportunity for potential homebuyers. As with any real estate transaction, there are a lot of details and complex contracts involved in buying and fixing up an outdated home. Veitengruber Law is a full-service real estate law office with experience in all areas of contract review, real estate representation, and closing services. We can help ensure you are protected and supported as you purchase your dream home.

How Much House Can You Afford in the NJ Real Estate Market?

NJ real estate

As a prospective first time home owner, it can be easy to get caught up in the dream of finding the perfect house without adequately taking your finances into account. In the rush of excitement, things like down payments, property taxes, and closing fees can be pushed to the back of your mind. You might find yourself in love with a property only to realize it is way out of your budget when the final numbers are laid out. When you first start the home buying process, it can be hard to know how much house you can actually afford. Before you jump into looking at houses, it is important to determine a realistic real estate budget. If you are looking own NJ real estate, here are some tips:

Know your take home pay.

Before you can start browsing property listings, you’ll need to become uber familiar with your current financial situation. Determining your take-home pay is a great first step to figuring out how much house you can afford. Your take-home pay is how much money you bring home in a month once taxes and other contributions are taken out of your paycheck. Unless you have a hefty savings that can cover the full price of a house, this monthly take-home pay is the money you will be using to cover your monthly mortgage payments on the loan you will take out to purchase the house.

Determine the length of your loan.

When it comes to a real estate loan, there are three major aspects to consider: the term, the interest rate, and the principal. The term of the loan is how long it will take for you to pay back the loan in full, including interest. The average mortgage term in NJ is 30 years.  Every home loan will come with interest. Interest is the amount that is in addition to the principal amount you will pay back to your lender. Mortgages have compound interest, meaning the interest is calculated monthly based on the overall debt you owe that month. You will be able to pay less in interest if you can afford higher monthly payments over a shorter period of time.

Decide on “fixed rate” or “adjustable rate.”

The amount of interest that will accrue on your loan will depend on whether you have a fixed rate mortgage or an adjustable rate mortgage. A fixed-rate loan has a locked interest rate. If it starts out at 4.2% it will always be 4.2%. This is typically the better option, especially if you can lock in a low interest rate, because your monthly payment will never change. With an adjustable mortgage, your interest rate will change with the fluctuations of the real estate market. This means you could end up with a very high interest rate over time.


Your total monthly loan payment is the biggest determining factor in determining how much house you can afford.


Allocate funds for an adequate down payment.

Most real estate experts suggest allocating no more than 25% of your take-home pay on housing expenses. If you can keep your housing expenses to less than 25% of your take-home pay, you should be able to manage the rest of your monthly living expenses comfortably. The size of your down payment can make your monthly more affordable. The more money you put down, the less money you will have to borrow (and repay.) It is generally suggested to put down at least 10-20% of the purchase price of the home. If you can afford a 20% down payment, you will not have to pay for private mortgage insurance (PMI), which can result in big savings on your monthly loan payment.

Of course, the money you borrow from a lender isn’t the only thing to consider when buying a home. You must also remember to calculate and prepare for:

  • Property taxes
  • Homeowners insurance
  • Closing costs
  • Renovations (if applicable)

All of these things will have an impact on your monthly costs for housing and your ability to afford a particular property. Buying a house is a major financial investment. Thankfully, there are plenty of online tools to help simplify the process for you. SmartAsset.com offers a free mortgage calculating tool that includes the home insurance and taxes you can expect to pay as a home owner in New Jersey.

Becoming a homeowner is a cause for celebration, but the process itself can also be very stressful. Veitengruber Law is a full service real estate law firm in NJ. We can help you through all of the financial aspects of the real estate process so you can focus on the excitement of your new home.

Help! I Want out of my NJ Real Estate Contract!

NJ real estate

The main goal of the negotiations surrounding a NJ real estate deal is for all parties involved to sign a contract they’re happy with. Sellers want to make a profit on their property and buyers want to have confidence in the huge investment they just made for their future. Sometimes, though, both parties sign on the dotted line only to find themselves second-guessing their decision. If something doesn’t seem right or you start to realize you didn’t get as much out of the deal as you had hoped, you may find yourself wanting out of the deal.

Is it possible to back out of a signed NJ real estate contract?

The good news is that even after you sign, there are still some ways to get yourself out of a real estate contract, but you have to act quickly. In New Jersey, the 3 day attorney review period will allow you to work with an attorney to bring your concerns back into negotiation. It is critical that you take advantage of New Jersey’s unique 3 day review period. During this time, you will work with your real estate attorney to review all aspects of the contract. As long as you’re within the attorney review period, you can make changes to the contract or walk away from the deal altogether.

What if I missed the attorney review period but still want out of my contract?

After the 3 day review period has passed, it is much more difficult to “un-sign” your name from your NJ real estate contract. In our experience, the three main reasons for a broken real estate contract are:

  1. Unsatisfactory appraisal
  2. Significant inspection issues
  3. Contingency clauses

Many real estate contracts include a contingency stating that the buyer and their lender must approve of the inspection and appraisal before a deal can move forward. If the buyer or lender is unsatisfied with the results of the inspection, appraisal (or both), it could open the door for further negotiations.

An appraisal price that is significantly lower than the purchase price will raise huge red flags for a lender and can give the buyer leverage to re-open contract negotiations. Likewise, a home inspection that turns up significant issues could give the buyer cause to break the contract if a seller is unwilling to make the necessary repairs.

While issues with inspection or appraisal can help the buyer back out of a contract, the “kick-out” clause of a real estate contract can be utilized by sellers. Traditionally, real estate contracts include a contingency clause that protects buyers from carrying two mortgages. The language usually reads like: “Buyer’s obligation to purchase this property is contingent on the sale of their current home.”

In today’s real estate market, many contracts now include contingency clauses that protect the seller if closing is dependent on the buyer selling their current home (as shown in the example above). Known as the “kick-out” clause, this contingency allows the seller to entertain other, potentially better offers on a property as long as the original potential buyer’s property has not sold. If a new buyer is found, the seller can “kick out” the original buyer and accept the new offer.

The key to getting out of a real estate contract is working closely with a trusted real estate attorney. In addition to helping you legally back out of a contract, your New Jersey real estate attorney will use the law to work in your best interest throughout the entirety of contract negotiations. Veitengruber Law will point out any issues or reservations about a contract early in the process. Understanding the ins and outs of a contract before you sign can save you the trouble of backing out later.

Our NJ real estate team is experienced in handling all of the complex legal details that go into real estate contracts. Working with us will ensure a smoother transaction and will get what you want! Don’t wait until you sign the contract to realize you need the advice of an expert attorney. Call us today for your free consultation about your real estate goals.

NJ Real Estate Lingo Explained

NJ real estate

In New Jersey, real estate contracts are required to be written in “plain language” to make sure even those inexperienced with buying and selling real estate can understand the terms of the agreement. However, a lot of real estate terms that are considered
“plain language” can still be confusing. Unfamiliar real estate terms can make it seem like the people around you are speaking a foreign language. This list of 14 real estate terms will help you make informed decisions during your future NJ real estate transactions.

Amortization:

This is a method of adjusting the ratio of principal to interest over time in order to equalize the monthly payment over the life of a mortgage or loan. So, while initially the interest payment will be high and the principal payment will be low, by the end of the loan the interest payments will be low and the principal payments will be high. Amortization of a loan will impact your ability to finance your property, making your payments standardized throughout the life of the loan.

Appraisal:

A lender will require a licensed appraiser to estimate the value of a home based on an investigation of the property and the selling price of similar homes in the area. This will help the lender determine if they will agree to mortgage a property.

Competitive Market Analysis (CMA):

CMA is a comparison of one property to other properties of similar size, style, location, and internal/external features that have recently sold or are on the market. This helps real estate agents determine how much money a house may be worth at any given time and help establish a listing price.

Contingencies:

In real estate, a contingency is a specific condition that must be met before closing. There are several different kinds of contingencies for the buyer and seller in a real estate transaction. The buyer will need to make sure they can get financing for the sale while the seller must ensure the home can pass an inspection, among other responsibilities.

Closing & Closing Fees:

Closing is the final step in a real estate transaction process. This is where the documents are submitted and carried out and when the sale of the property is complete. At closing, a closing statement will be issued listing the financial responsibilities of both buyer and seller. Closing costs include loan origination fees, attorney fees, discount points, and recording fees. This is typically somewhere between 3% and 5% of the price of the property.

Down Payment:

This is the amount of money a buyer will pay in cash initially in order to purchase a property. This is not financed and is typically anywhere from 5% and 25% of the overall value of the property. The bigger the down payment, the less a buyer will have to finance.

Escrow:

Escrow is when a neutral third party is hired during a real estate transaction to handle money transactions and hold documents as agreed upon by the buyer and seller of a property. They basically ensure the smooth transfer of ownership from seller to buyer and make sure all paperwork is handled correctly.

Fixed-rate mortgage and Adjustable-rate mortgage:

There are two kinds of conventional loans: fixed-rate and adjustable-rate. Under a fixed-rate mortgage, the interest rate stays the same throughout the entirety of the loan. Under an adjustable-rate mortgage, the interest rate can change over the course of the loan at the five, seven, and ten year marks. Depending on market conditions, this means your loan rate could increase drastically.

Inspection:

Once an offer is made on a home, the potential buyer will schedule an inspection. This typically costs between $500 and $800 and includes a full assessment of the property, including plumbing, structural stability, heating, electricity, and any appliances included in the sale.

Lien:

This is a legal claim or action on a property used as security for the payment of debt. A lien may be in place on a property for issues like an unpaid contractor or unpaid taxes.

Listing:

A listing is a home or property that is for sale. The home is often listed on online real estate sites or in real estate publications. This is how sellers alert potential buyers that their property is for sale.

Offer:

An offer is made by the buyer as an initial price offered to the seller. The offer can be accepted, rejected, or countered with a different offer by the seller.

Pre-approval Letter:

This is a letter from a bank or lending institution indicating the estimated amount they are willing to lend. This letter will help you determine how much you can afford as you start looking for houses and allows the seller to see that you will be able to get a loan when you need it.

Title Insurance:

Most mortgage lenders will require a buyer to pay title insurance as part of closing costs on a property. After a seller has accepted a buyer’s offer, title insurers will search through public records to determine whether or not the home seller had rights to the title of the house and that there are no liens on the property. This report is typically done within a week.

Veitengruber Law has extensive experience handling complex real estate transactions, from short sales to closings to refinancing and mortgage modification. Real estate transactions often involve complicated legal contracts. When you partner with us, we will advocate for your best interests and make sure you can make informed decisions about your real estate goals.