2022
Nothing compares.
Home Buyer’s Guide
5 6 8 9 11 12 15 16 18 19 21 22 24
Table of Contents
Working with a Prominent Properties Sotheby’s International Realty Agent Beginning the Process How Much Home Can You Afford? Mortgage Financing Terms Contract of Sale | Terms Agreed | Under Contract Home Inspections Title Services | Prior to Closing Closing Buyer’s Chart for Tracking Closing Costs New Jersey Rates for Title Insurance Moving Tips Moving Day Glossary
{{page}}
Whatever your reasons for buying, know that finding the right home, in the perfect neighborhood and at a cost that is within your budget, is no small task. That’s why many buyers enlist the help of a full-service Prominent Properties Sotheby’s International Realty agent. There are many benefits you receive from working with a licensed professional with specialized skills. your Prominent Properties Sotheby’s International Realty agent Will explain the home buying process. Knows the local market and can quickly narrow it down to a few areas where you are likely to find your home at the price you want. By knowing your needs and doing the legwork, will present the homes that best meet your criteria. When viewing homes with you, will help you determine the pros and cons. Will help you maximize online home search tools available to you on sothebysrealty.com and the MLS website. Will provide information and make appointments to see almost any property listed for sale. A home does not need to be listed by a Prominent Properties Sotheby’s International Realty agent in order to get detailed information and an appointment to view. Will provide you with statistical information on towns (with the ability to narrow down the information to neighborhoods or streets) in order to help you make informed decisions regarding the offering price. The statistics include: Active Listings, Under Contract, Units Sold, Average List Prices and Sales Prices, Average Days on the Market and Sale Price to List Price Ratios. Will provide you with tax assessment information and assessed value to sale price ratios and historical trends. Will provide you with subject property listing history and past sales. Will provide market trends, rate of absorption and comparable properties. Will help you with the towns information and requirements for you to apply for OPRA requests, which pulls the property permit history. Will negotiate to obtain favorable results for you. Will introduce you to other professionals who are able to assist you through the various phases of the home buying process. Is a thoughtful, capable and trustworthy advisor with market knowledge that will assist you with your due diligence.
Working with a Prominent Properties Sotheby’s International Realty Agent
Beginning the Process
Organization is the key to finding the home you want while spending the least amount of time and energy. It's always best to find out how much house you can afford before you go house-hunting. Your Prominent Properties Sotheby’s International Realty agent can introduce you to a mortgage representative who can assist you with determining how much of a down payment you can afford, along with a monthly payment you can handle. Factors to consider when looking for a home Define your ideal lifestyle (e.g., suburban, rural, urban). Focus on a particular city, town or geographic location. Assess property taxes, common charges, education systems and more. Decide whether or not availability and proximity to public transportation is important. Consider which architectural style you prefer (e.g., cape cod, colonial, contemporary, ranch, split-level, Tudor, etc). Determine the number of bedrooms and baths you desire. Separate the essentials (for your A list) from the items you could do without. Prioritize the rest of the items in a way that helps your agent understand your wants and needs. Keep good notes as you view homes as it becomes difficult to remember which features belong to which home. Photographs and videos may not always be permitted. Look beyond cosmetics to make sure the home has good bones, floor plan and features that would work for you.
How Much Home Can You Afford?
Mortgage Financing Terms
The following costs vary according to your mortgage amount: Appraisal Fee – a fee for appraising the value of the property. Credit Report Fee – a fee for investigating the borrower’s credit rating. Homeowners Insurance Policy – an insurance policy listing the lender as the loss payee. The buyer is required to provide a copy of a “paid” receipt evidencing payment of a full years premium, in advance, to the mortgage lender before closing. Cost will vary according to type of coverage and insurance company. Interim Interest – interest accrued on the mortgage for the number of days remaining in the month of the closing. Lender’s Attorney Fee – a fee paid by the borrower to the lender’s attorney for reviewing title to the property, resolving any title problems, coordinating the closing, preparing the bank documents, attending the closing, dispersing the funds at closing, and ensuring the documents are accurate and properly recorded. Not all lenders engage the services of an attorney. Mansion Tax – all single family homes with a purchase price over $1,000,000 are subject to a NJ State Tax of 1% of the entire purchase price. This tax is imposed on the buyer. Mortgage Recording Fee – a fee paid to the county clerk’s office for recording mortgage documents. Origination Fee – a fee paid at the time the mortgage application is processed. Points – many loan programs allow you to receive a discounted interest rate by paying points. One point equals 1% of the loan amount, and the more points you pay, the more you may be able to discount your rate. The ability to pay points may or may not be available or a requirement, depending upon your loan program. Private Mortgage Insurance (PMI) – a premium paid by the buyer to insure the lender if the buyer is borrowing more than a certain percentage of the appraised value of the home. Tax and Insurance Escrows – lender required funds deposited by the buyer into an escrow account, to be used by the bank to pay future upcoming tax and insurance payments. Title Insurance – a one-time charge to the buyer for insurance that provides a buyer with coverage if title to the property is defective. Two types of insurance include the required coverage for the lender and recommended coverage for the buyer.
Before you start looking at homes, it’s a good idea to find a target price range that you can afford. A mortgage lender will want to make sure you can handle the down payment, plus a monthly mortgage payment which usually includes principal, interest, taxes and insurance (PITI) but may include other amounts depending upon the amount you intend to borrow or the type of property you are planning on purchasing. Interest rates and your personal finances will influence the amount of house you can afford. That’s why it’s always good to talk to a lender before you start shopping for a home. There are a wide variety of loan programs available to buyers and your Prominent Properties Sotheby’s International Realty agent can always give you the names of several mortgage representatives who can review options with you. In order to plan properly, you need to understand what lenders are looking for from a borrower. There are several factors that help determine if you qualify for home financing, including: Your credit score Your income Your assets Your credit history Most loan programs require you to verify all of your income sources. Your mortgage consultant will let you know what documentation is needed. Typically, you will need to provide pay stubs and your W-2, and if you are self employed, you may need to provide copies of your tax returns. Also, if you plan to use gift funds or funds from other sources, please make sure you let your mortgage representative know. Based upon the amount of your down payment, there are a variety of loan programs available. Closing costs are associated with finalizing the transaction and include the appraisal fee, loan origination fee, title insurance, settlement services and legal recording of documents. It is important to discuss these fees with a mortgage representative. All lenders review a borrower’s credit history to determine amounts owed and the borrower’s history of repaying debt. Before you search for a home, you will need to know what you can afford. This is an important step to take before you start your home search as this allows you to narrow your home search to a price range that’s comfortable. Also, if you are planning on financing the purchase, a mortgage pre-approval is needed to present an offer on a home.
Contract of Sale | Terms Agreed Under Contract
This is not a complete list, only a partial one out lining details included in the contract of sale. Each contract of sale will vary based on the circumstances of the purchase. Your attorney will assist you with any questions you may have regarding the contract. Property address, block and lot. The selling price of the property, amount of down payment and balance due at closing. The mortgage loan amount and the term of the loan. Provisions permitting the agreement to be canceled if the mortgage contingency is not met. The target closing date. Provisions regarding inspections. A clause specifying that the house will be sold in its current condition. A stipulation that the sale is conditional upon the seller providing title that is free from liens and encumbrances. Requirements for certificate of occupancy or other certificate as required by the specific town where the property is located. Additional disclosure forms. Once the seller accepts the offer, terms are agreed. The seller will sign the contract and the executed contract will be sent to you, your attorney, the seller and the seller’s attorney. Attorney review commences. You will review the contract with your attorney who will discuss with you any modifications necessary. Your attorney may disapprove or cancel the contract and negotiate with the seller’s attorney any modifications. As the buyer, you will sign off on the finalized contract and provide the predetermined down payment. The status of the property will change to Under Contract in the local multiple listing service. You will next work to satisfy any contingencies that remain in the contract, such as finalizing your financing, performing inspections, and reviewing the title report.
Home Inspections
Additional Inspections That May Be Needed
Generally your contract will be contingent on a professional home inspection. Home and other inspectors are trained to look beyond the cosmetics to make sure that there are no structural, mechanical or environmental defects with the home. The inspector looks for repairs that are needed and reports on the condition of the home. The standard home inspector’s report will review the conditions of the home’s heating and cooling systems; interior plumbing and electrical systems; the roof, attic and visible insulation; walls, ceilings, floors, windows and doors; foundation, basement and visible structure. The inspector will also look for cracks in cement walls, water stains that indicate leakage, and any indication of wood rot. A home inspection also points out the positive aspects of a home, as well as the maintenance that will be necessary to keep it in good shape. Your Prominent Properties Sotheby’s International Realty agent, is familiar with home inspection services and can provide you with the names of inspectors that have been hired by clients who have expressed satisfaction with the results. Remember, no home is perfect and neither a buyer nor an agent is trained to identify or locate physical or other defects to a property that are not readily observable. If problems are found, your Prominent Properties Sotheby’s International Realty agent will help you navigate through the process. Also, the types of inspections you may choose to have performed by professionals will depend upon the specific features, location and age of the home you select to purchase. Asbestos – this mineral fiber was once used for insulation and fire protection. Asbestos fibers released into the air may pose a health hazard. Any work performed on asbestos must be done by a properly trained and licensed contractor. Carbon Monoxide – this odorless, colorless, and tasteless gas can be fatal if inhaled at sufficient levels. Carbon monoxide in the home is produced from fuel-burning sources such as gas, oil, or wood-fired heating systems Compliance is required for closing. Chimney – level II inspections are conducted to check the flue lines and condition of the hearth and chimney. Lead Paint – paint chips or dust from deteriorating lead paint are toxic and can cause lead poisoning when inhaled or ingested. If the home was built before 1978, the seller must complete a lead paint disclosure form, which will be signed by the buyer acknowledging receipt of the disclosure. A lead disclosure booklet endorsed by the EPA will also be provided to both parties. Mold – a mold assessor can test for mold and prepare a remediation plan. Oil Tank – it is advisable to scan the property for the presence of any underground storage tanks. Pest and Termite – an inspection will be performed for the presence of all forms of wood-destructive insects in the home. The inspection report should contain a certificate of non-infestation, or information detailing existing damage and recommended treatment. Radon – this invisible, odorless and slightly radioactive gas can seep into a house from soil and rock below the home’s foundation. Prolonged exposure to high levels of radon can pose a health hazard. In most cases, if radon is detected, steps can be taken to remedy the problem. Septic – a visual inspection of the septic system area or dye test will often be performed. Since septic systems require routine maintenance, be sure to find out when the system was last pumped out and its condition at that time. Sewer Line – a camera inspection is conducted to check the flow of the sewage to the street. Smoke Detector, Carbon Monoxide Detectors and Fire Extinguisher – confirmation of functioning detectors and extinguishers and compliance with local regulations will be provided by the seller. Water – for homes that have well water, a laboratory analysis will test the quality of the water. Another test may be performed to determine the capacity of the well.
WHY DO YOU NEED TITLE INSURANCE? Title insurance is a one-time premium paid when you purchase a home that protects you from financial loss due to defects in real property ownership, including forged instruments, fraud, undisclosed heirs, easements, defective deeds, clerical errors or undisclosed but recorded liens. In the event of a claim, title insurance also pays for legal defense costs to protect your interests. In addition to the owner’s title policy, all mortgage lenders require that home buyers purchase title insurance in the amount of the mortgage. If you decide to refinance your mortgage, another title insurance premium will need to be paid. WHO CHOOSES THE TITLE SERVICE COMPANY? The choice of a title insurance and settlement company is made by the buyer. Your attorney or Prominent Properties Sotheby’s International agent can offer you a list of qualified choices. Prior to the Closing Satisfy all the contingencies stated in the contract of sale, which are the responsibility of the buyer. Select a title service company. Your attorney will order a title search of the property and the title insurance policy. Obtain a survey of the property. Review the preliminary closing statement for information pertaining to closing costs and the funds you will need for closing. Remember to follow all instructions provided by your attorney or your settlement company as to delivery of your closing funds. Never wire transfer money to any one without calling the office and speaking to someone personally to confirm wire information. Even if an email looks like it has come from someone involved in your transaction, please call first to verify the information before initiating any wire transfer. You will never be instructed to wire money related to a closing without verbal confirmation. Do not accept emailed instructions from anyone without voice verification. Confirm the specific documents you should bring to the closing with your attorney. Your attorney, lender or settlement company will schedule the date, time, and location of your closing with the seller’s attorney. Perform a final “walk-through” of the property with your Prominent Properties Sotheby’s International Realty agent.
Title Services
At the closing, you complete the purchase of your new home, and the title to the property is legally transferred from the seller to you, the buyer. Be sure to ask your attorney any questions you may have about this process. Parties Present – you, your attorney, your Prominent Properties Sotheby’s International Realty agent, the seller, seller’s attorney, seller’s agent, the lender’s attorney and the title closer may attend the closing. Please reach out to your attorney to verify who will attend. Adjustments – the attorneys and the title closer will review all documents and agree on the calculations of adjustments. All documents are then signed and adjustments are made before the seller receives full payment for the home. Responsibilities of Title Closer – collect documents to transfer the property and ensure all information necessary to clear liens has been obtained. Confirm and pay off any mortgages, liens, and judgments on the property. Collect open taxes and confirm all taxes are paid to date. Documents to the County Clerk’s Office – the deed and required documents are given to the title closer to be recorded at the county clerk’s office. Keys to the Property – you will receive the keys to the property. Final Closing Statement – your attorney will give you a final closing statement for your records once the closing is complete. What to Bring to the Closing You will be instructed prior to closing as to the amount of money that will be needed and directed as to how to make those funds available for closing. Never wire transfer to any one without calling the office and speaking to someone personally to confirm wire information. Never accept instructions by email without voice verification. Checkbook for any additional closing costs. Photo ID – driver’s license or passport for all borrowers. Any additional documents required by the lender or your attorney. DESCRIPTION OF COSTS Reimbursement to Seller for Prepaid Taxes – the buyer may owe the seller a portion of the property taxes previously paid for by the seller. Tax Escrow – funds required by your lender to be placed into an escrow account for payments of future taxes. Attorney’s Fee – your attorney’s fee will vary. Adjustments or Apportionment – fees that are pro-rated to determine the buyer’s costs, including adjustments on taxes. Survey – A fee to survey any major changes to the property. Settlement Company Fees – any mansion tax imposed upon the buyer, recording fees for the deed and mortgage and any additional fees charged by your lender not previously collected. INSURANCE COSTS Departmental Searches – a fee for the search of municipal records of the property including violations. Endorsements – a fee for added title insurance coverage, required by your lender. Title Insurance – a one time premium paid to protect the purchaser’s home ownership rights and the lender’s valid lien on the property. Premiums are set by the state and vary according to purchase price. Recording Fee – a fee paid to the county clerk to record any required documents, including the deed and mortgage.
Closing
Legal and title costs Attorney Fee $ __________________________ Recording Fees with Mortgage and Deed $ __________________________ Settlement Company Fees $ __________________________ Survey $ __________________________ Title Searches/Title Policy Endorsements $ __________________________ Title Insurance Premium See schedule - NJ Rates for Title Insurance on the following page. MORTGAGE COSTS Application Fee $ __________________________ Appraisal $ __________________________ Credit Report Fee $ __________________________ Lender’s Attorney Fee $ __________________________ Miscellaneous Mortgage Costs $ __________________________ PMI (Private Mortgage Insurance) $ __________________________ Points $ __________________________ Tax and Insurance Escrow $ __________________________ INSPECTION COSTS Home inspection $ __________________________ Lead Paint $ __________________________ Level II Chimney $ __________________________ Mold $ __________________________ Oil Tank Scan $ __________________________ Pest and Termite $ __________________________ Pool (if applicable) $ __________________________ Radon $ __________________________ Roof $ __________________________ Septic (if applicable) $ __________________________ Well Water (if applicable) $ __________________________ Other Miscellaneous Inspections $ __________________________ OTHER COSTS Homeowner’s Insurance (One year prepaid premium) $ __________________________ Flood Insurance (if applicable) $ __________________________ Prepaid Tax Adjustment $ __________________________ Mansion Tax on Residential Properties $ __________________________ (1% of consideration when sales price is over $1,000,000)
RATE PER $1,000 OR FRACTION THEREOF Policy Amount Standard 0 – $100,000 $5.25 $100,001 – $500,000 $4.25 $500,001 – $2,000,000 $2.75 Over $2,000,001 $2.00 All rates rounded to the nearest whole dollar. Above rates are for premium charges only. Search and preparation charges, along with lender requested endorsement charges will determine final cost to consumer.
Buyer’s Chart for Tracking Closing Costs
AMOUNT
STANDARD
$650,000
$2,638
$675,000
$2,706
$700,000
$2,775
$725,000
$2,844
$750,000
$2,913
$775,000
$2,981
$800,000
$3,050
$825,000
$3,119
$850,000
$3,188
$875,000
$3,256
$900,000
$3,325
$925,000
$3,394
$950,000
$3,463
$975,000
$3,531
$1,000,000
$3,600
$1,125,000
$3,944
$1,250,000
$4,288
$1,500,000
$4,975
$1,750,000
$5,663
$2,000,000
$6,350
$2,500,000
$7,350
$3,000,000
$8,350
$4,000,000
$10,350
$5,000,000
$12,350
$50,000
$263
$75,000
$394
$100,000
$525
$125,000
$631
$150,000
$738
$175,000
$844
$200,000
$950
$225,000
$1,056
$250,000
$1,163
$275,000
$1,269
$300,000
$1,375
$325,000
$1,481
$350,000
$1,588
$375,000
$1,694
$400,000
$1,800
$425,000
$1,906
$450,000
$2,013
$475,000
$2,119
$500,000
$2,225
$525,000
$2,294
$550,000
$2,363
$575,000
$2,431
$600,000
$2,500
$625,000
$2,569
SAMPLE RATE SCHEDULE
New Jersey Rates for Title Insurance Effective December 1, 2021 as approved by New Jersey Commissioner of Banking and Insurance. All rates are subject to change.
Moving Tips
6 – 8 WEEKS BEFORE: Use up things that may be difficult to move, such as frozen food. Get estimates from professional movers. Once you’ve selected a mover, discuss insurance, packing, loading and delivery, and the claims procedure. Sort through your possessions. Decide what you want to keep, sell or donate to charity. Record serial numbers on electronic equipment, take photos (or video) of all your belongings and create an inventory list. Obtain a change of address packet from the post office and send to creditors, magazine subscription offices and catalog vendors. Discuss moving expenses with your accountant and keep accurate records. 2 – 4 WEEKS BEFORE: If you’re moving to a new community, contact the Chamber of Commerce and school district and request information about services. Begin packing nonessential items. Arrange for storage, if needed. Get driver’s license, car registration and insurance in order. Transfer your bank accounts to new branch locations. Cancel any direct deposit or automatic payments from your accounts if changing banks. Make special arrangements for your pets, if needed. Have your car checked and serviced. 2 – 3 DAYS PRIOR: Defrost your refrigerator and freezer. Have movers pack your belongings. Label each box with the contents and the room where you want it to be delivered. Arrange to have payment ready for the moving company. Set aside legal documents and valuables that you do not want packed. Pack clothing and toiletries, along with extra clothes in case the moving company is delayed. Change your utilities, including phone, power and water, from your old address to your new address.
The process of moving is long and complex. Being organized, knowing what needs to be done, and tackling tasks efficiently can make your move significantly less stressful. Here’s a checklist to keep you on task and help make your move successful.
Moving Day
MOVING DAY: OLD HOME Make a list of every item and box loaded on the truck. Let the mover know how to reach you. Double-check closets, cupboards, attic, basement and garage for any left-behind items. MOVING DAY: NEW HOME Be on hand at the new home to answer questions and give instructions to the movers. Check off boxes and items as they come off the truck. Install new locks. Confirm that the utilities have been turned on and are ready for use. Unpack your “first day” box (see list for suggested contents). Examine your goods for damage. MOVING ESSENTIALS: Plenty of boxes Furniture pads Hand truck or dolly Packing tape Bubble wrap Packing paper Scissors/utility knife Labels Felt-tip markers FIRST DAY BOX: Scissors/utility knife Markers and paper Toilet paper Cleaning supplies Soap Trash bags Coffee cups Teakettle Coffee, tea, soft drinks Paper plates/ plastic utensils Snacks Bath towels Sheets
Accepted offer
is an offer presented by the buyer and agreed to by the seller. The contract is then subject to attorney review.
ADJUSTABLE-RATE MORTGAGE (ARM)
interest rates on this type of mortgage are periodically adjusted up or down depending on a specified financial index.
Adjustment Cap
is the maximum percentage the interest rate can go up or down each time it is adjusted or over the life of the loan.
Adjustment Period
is the time period between interest rate changes on an ARM. You can select an adjustment period from your lender's available options.
AMORTIZATION
a method of equalizing the monthly mortgage payments over the life of the loan, even though the proportion of principal to interest changes over time. In the early part of the loan, the principal repayment is very low, while the interest payment is very high. At the end of the loan, the relationship is reversed.
ANNUAL PERCENTAGE RATE
the actual finance charge for a loan, including points and fees, in addition to the stated interest rate.
APPRAISAL
an opinion of the value or worth of a property performed by a licensed appraiser.
ASSESSED VALUE
the value placed on a property by a municipality for purposes of levying taxes. It may differ widely from appraised or market value.
Assumption of Mortgage
a buyer’s agreement to assume liability under an existing note secured by a mortgage. The lender must approve the buyer in order to release the original borrower (usually the seller) from liability.
BALLOON PAYMENT
a large principal payment due all at once at the end of a stated loan term.
CAP
a limit on how much the interest rate can fluctuate an adjustable-rate mortgage.
Certificate of Occupancy (CO)
a certificate issued by the municipality’s building inspector declaring that the house and any improvements have been constructed in compliance with all applicable state, county, and town codes and confirms that the homeowner has legal permission to use these improvements.
CLOSING
the deed to a property is legally transferred from seller to buyer and the buyer is given possession of the property.
Closing disclosure
the financial disclosure summary accounting for all funds received and expended at closing, including deposits for taxes, hazard insurance, and mortgage insurance.
COMMISSION
a fee (usually a percentage of the total transaction) paid to a broker for services performed.
Commitment
an agreement from a mortgage lender to provide a loan of a specific amount on specified terms to finance a home purchase.
COMPARATIVE MARKET ANALYSIS (CMA)
a survey of the attributes and selling prices of comparable homes on the market or recently sold; used to help determine a correct pricing strategy for a seller’s property.
Condominium
a form of real estate ownership in which the owner has title to a particular unit of a multi-unit complex and also has a proportional interest in certain common areas.
CONTINGENCY
a condition in a contract that must be met.
CONTRACT
a binding legal agreement between two or more parties that outlines the conditions for the exchange of value (for example: money exchanged for title to property).
Conversion Clause
a provision in some ARM's offering the option to change the ARM to a fixed-rate mortgage.
Cooperative (CO-OP)
a form of multiple ownership in which a corporation holds title to a property and grants occupancy rights to shareholders by means of proprietary leases or similar arrangements.
Glossary
Covenant, Conditions, and Restrictions (CCRs)
documents that control the usage, and stipulate the requirements and restrictions of a property.
Credit Report
a report compiled by one or more credit bureaus that details credit history, credit inquiries and facts about all accounts ever opened with respective credit lines and on-time or late payment behavior.
Deed
a legal document that formally conveys ownership of a property from seller to buyer.
DOWN PAYMENT
a percentage of the purchase price that the buyer must pay from their own account in readily available funds and may not borrow from the lender.
Due-on-sale Clause
an acceleration clause requiring full payment of a mortgage or deed of trust when the secured property changes ownership.
Easement
a right conferred by grant or agreement that allows use of another owner’s land for a specific purpose.
Encroachment
improvement (e.g., a fence, driveway, or building) that intrudes on another owner’s property.
EQUITY
the value of the property actually owned by the homeowner: purchase price, plus appreciation, plus improvements, less mortgages and liens.
ESCROW
a fund or account held by a third-party custodian.
Escrow Account
an account maintained by the lender to pay for future taxes, hazard insurance, and other items. A portion of your monthly mortgage payment (exceeding principal and interest) is deposited into this account for such usage.
Fee Simple
the most comprehensive form of real estate ownership, in which the owner has unrestricted power to dispose of the property as desired, including leaving by will or inheritance.
Finance Charge
the total charge for obtaining a loan, including interest payments, any interim interest paid at closing, origination fee, and other charges levied by the lender.
FIXED-RATE MORTGAGE
Interest rates on this type of mortgage remain the same over the life of the loan. Compare to “adjustable-rate mortgage”.
FIXTURE
an item (such as a kitchen cabinet or light fixture) that is permanently attached to a property and belongs to the property when it is sold.
HAZARD INSURANCE
compensates for property damage from specified hazards such as fire and wind.
Index
a published rate used to determine changes in the interest rate of an ARM over the term of the loan.
Inspection
a comprehensive and exhaustive examination of a home by a licensed inspector or other inspectors retained by the buyer to evaluate different components or systems.
INTEREST
the cost of borrowing money, usually expressed as a percentage rate.
Joint Tenancy
an equal undivided ownership of property by two. Upon the death of any joint tenant, the survivor assumes the decedent’s interest in the property.
LIEN
a security claim on a property until a debt is satisfied.
Lifetime Adjustment Cap
the maximum interest rate that can be charged on an ARM.
LISTING Agreement
an agreement whereby an owner engages a New Jersey licensed real estate company for a specified period of time to market a property, for which, upon the sale, the agent receives compensation usually in the form of a commission.
Loan to Value Ratio (LTV)
the ratio of the loan amount to the value of the property. Different loan programs have different maximum LTVs.
Mansion Tax
a NJ State tax levied on buyers of single family home purchases over $1,000,000.
Notes
Margin
the percentage added to the index rate for each interest rate adjustment on an ARM.
MARKET PRICE
the actual price at which a property sold.
MARKET VALUE
the price that is established by present economic conditions, location and general trends.
MORTGAGE
security interest of a lender against a property until the debt is paid.
Mortgage Life Insurance
a life insurance policy whose coverage decreases as the mortgage balance declines. If the borrower dies while the policy is still in force, the debt is automatically covered by insurance proceeds.
MULTIPLE LISTING SERVICE (MLS)
a system that provides to its members detailed information about properties for sale.
Negative Amortization
An increase in the mortgage balance occurring when monthly payments do not cover the total interest accrued. The uncovered interest is then added to the unpaid principal balance.
ORIGINATION FEE
a fee paid to a lender to process a loan application.
PITI
principal, interest, taxes and insurance.
POINT
each point represents one percent of the loan principal.
Pre-approval
the commitment a lender makes to a potential borrower of a loan amount based on a completed loan application. This application contains credit reports, income, debt, and savings information. The commitment is subject to the borrower meeting qualification requirements at time of purchase and review of collateral by an underwriter and an appraisal of the property, as necessary.
Private Mortgage Insurance (PMI)
insurance written by a private company to protect the lender against loss if the borrower defaults on the mortgage.
PRINCIPAL
one of the parties to a contract; or the amount of money borrowed, for which interest is charged.
PRORATE
divide or assess proportionately.
PURCHASE & SALE AGREEMENT
a contract between buyer and seller that outlines the details of the property transfer.
Rate Cap
the limit of how much the interest rate may change on an ARM at each adjustment and over the life of the loan.
Rate lock
a guarantee of a specific interest rate through the closing date if it occurs within a specific time period.
Real Estate Sales Contract
a contract for the sale of real estate, in which the purchaser promises to pay the agreed purchase price and the seller agrees to deliver title to the property.
SETTLEMENT
same as "closing" in the State of New Jersey.
Survey
a measurement or drawing determining the location, boundaries and other physical features of a property. The survey can either be a location survey or a staked survey.
Term
the length of time it will take to pay a mortgage in full.
TITLE
a document that indicates ownership of a specific property.
Title Insurance policy
a policy that protects the purchaser and/or lender against loss resulting from defects in or claims to title.
TITLE SEARCH
detailed examination of the history of a property title to make sure there are no legal encumbrances, defects or liens.
15 Offices Throughout Northern & Central New Jersey
Each franchise is independently owned and operated.
WESTFIELD 908.654.6666 200 North Avenue East | Westfield, NJ 07090
PROMINENTPROPERTIES.COM | sothebysrealty.com
ALPINE 201.768.9300 1022 Closter Dock Road | Alpine, NJ 07620 EDGEWATER 201.840.8898 2 Main Street, Suite F | Edgewater, NJ 07020 ENGLEWOOD CLIFFS 201.585.8080 457 Sylvan Avenue, 2nd Floor | Englewood Cliffs, NJ 07632 FRANKLIN LAKES 201.848.4002 834 Franklin Lake Road | Franklin Lakes, NJ 07417 HOBOKEN 201.795.5200 306 Washington Street | Hoboken, NJ 07030 JERSEY CITY 201.333.7717 77 Hudson Street | Jersey City, NJ 07302 MONTCLAIR 973.783.6900 32 Valley Road | Montclair, NJ 07042 MONTVILLE 973.335.5700 670 Main Road | Towaco, NJ 07082 RIDGEWOOD 201.639.5555 55 North Maple Avenue | Ridgewood, NJ 07450 SADDLE RIVER 201.825.3600 152 West Saddle River Road | Saddle River, NJ 07458 SHORT HILLS 973.376.8188 555 Millburn Avenue | Short Hills, NJ 07078 SUMMIT 908.273.8808 309 Springfield Avenue | Summit, NJ 07901 TENAFLY 201.568.5668 90 County Road | Tenafly, NJ 07670 WEEHAWKEN 201.223.4207 500 Avenue at Port Imperial, Suite 100 | Weehawken, NJ 07085