One part of the homebuying and mortgage process that many people forgo is hiring an attorney to review everything to make sure it's all in order. But how much of a risk are they taking by doing so?
For most people, their home is the most expensive purchase they'll ever make. For that same reason, mistakes or problems encountered in that purchase can be very expensive as well. An attorney can help you spot potential trouble areas and avoid them before you get locked into an agreement.
Many homebuyers assume they can do without an attorney. Their real estate agent may have told them that all the documents are "pretty standard" and that "you can get an attorney if you wish, but most clients don't bother." Both of which may be true - but that still doesn't mean you can rest assured.
Scrutinizing the "standard" mortgage
Just because a mortgage or sales document is "standard" doesn't mean the terms may necessarily be to your liking. Most legal documents are standard, it's the details you have to watch out for. And just because most people don't hire an attorney doesn't mean it's a good choice for you - like what your mother said about everyone else jumping off a cliff.
Real estate agents may try to quietly discourage clients from using an attorney, because an attorney isn't going to find anything that will speed up the sale, but might find something that could delay it or kill it completely. And that's the last thing a real estate agent wants to see, although the better agents will recognize that their long-term success depend on repeat business and referrals from satisfied clients.
An attorney can pick up on thing you may overlook, like prepayment penalties that could prevent you from refinancing in a timely matter or that the interest rate, points and fees may be structured in a way that's making you pay more than you realize.
An attorney can be particularly useful in reviewing a sales agreement. If you're not careful, you could find yourself still committed to the sale even after an inspection turns up serious problems with the property or could lose your deposit if you back out. It's always a good idea to make a sales agreement conditional on a review by your attorney, just to protect yourself.
Examine the deed of sale
The deed of sale is also a place where an attorney can be helpful. The property may come with easements or other possible restrictions whose implications may not be readily apparent, or may come with certain obligations to you as a homeowner. There may also be signs of environmental problems or other liabilities that could come back to haunt you down the road. If you're buying a home in a development, the homeowner's association may have rules with unforeseen consequences.
New Jersey actually requires a five-day period to allow review by an attorney before any sales agreement can be finalized. This doesn't require that purchasers hire an attorney, but only gives them an opportunity to do so and have them review the sales agreement. Under the New Jersey law, however, a sales agreement can still be changed by either party before the end of the five days, so be aware that nothing is set in stone until the end of that period.
Hiring an attorney to review your sales and mortgage documents will probably cost several hundred dollars. However, given the size of the investment the typical home represents, it can be money well worth spending.