Buying a home can be an exciting, yet daunting task. With so many different terms and jargon used in the home buying process, it can be overwhelming for first-time homebuyers to navigate. If you’re planning to buy a home in Cresskill, New Jersey, it’s important to familiarize yourself with the common home buying terms used in the area. In this post, we’ll cover 9 common home buying terms you should know in Cresskill.
Pre-approval
It’s critical to get pre-approved for financing before you start searching for houses. After reviewing your financial details, such as your credit score, salary, and debt, and deciding how much money they are prepared to offer you, a lender has pre-approved you. This will help you determine your budget and limit your house hunt.
Closing Costs
Closing costs are fees associated with the purchase of a home that are paid at closing. These can include fees for the appraisal, home inspection, title search, and legal fees. Typically, closing costs are around 2-5% of the purchase price of the home, so it’s important to budget for these costs.
Home Inspection
A home inspection is an evaluation of the home’s condition by a professional inspector. This includes checking the electrical, plumbing, and HVAC systems, as well as the roof, foundation, and other structural components. The inspection report will provide valuable information about any issues with the home that need to be addressed before the sale is finalized.
Appraisal
An appraisal is an evaluation of the home’s value by a professional appraiser. The appraiser will look at factors such as the home’s location, size, and condition, as well as recent sales of similar homes in the area. The appraisal is used by the lender to determine how much money they are willing to lend for the home.
Title Search
A title search is a review of public records to ensure that the seller has the legal right to sell the property and that there are no liens or other issues with the title. This is typically done by a title company, and the buyer will need to purchase title insurance to protect against any issues that may arise.
Earnest Money
Earnest money is a deposit made by the buyer to show that they are serious about purchasing the home. This money is typically held in an escrow account and will be applied toward the down payment or closing costs. If the sale falls through, the earnest money may be forfeited to the seller as compensation for their time and effort.
Private Mortgage Insurance (PMI)
PMI is insurance that the buyer pays to protect the lender in case the buyer defaults on the loan. This is typically required if the down payment is less than 20% of the purchase price of the home. PMI is added to the monthly mortgage payment and can be removed once the loan-to-value ratio reaches 80%.
Escrow
Escrow is an account held by a third party that holds funds and documents related to the home purchase. This includes the earnest money, down payment, and closing costs. The escrow agent ensures that all parties meet their obligations before the sale is finalized.
Closing
Closing is the final step in the home buying process where all of the necessary documents are signed, the funds are transferred, and the title is transferred to the buyer. The closing usually takes place at a title company or attorney’s office, and all parties involved in the sale are present to sign the necessary documents.
Buying a home in Cresskill can be a complex process, but familiarizing yourself with these common home buying terms can help make the process smoother and less intimidating. It’s important to work with a knowledgeable real estate agent at NJLUX Real Estate to guide you through the process and answer any questions you may have. With the right information and support, you can find your dream home in Cresskill and make the home buying process a success.
