Things to Consider While Buying a House in New Jersey

The must read guide for buying a house in New Jersey

The process of buying your first property can be daunting considering the amount of paperwork that you have to show or get done with alongside dealing with local realtors to get the best deal you can get. It is advised, however, that you do your own research about the market first which can significantly reduce the amount of stress that you have to deal with in the back of your head.

Apart from all the other states, buying a property specifically in New Jersey can be relatively trickier and it will, mostly work in your favor, considering you are doing the right thing at the right place and time.

Buying a house, usually, is one of the biggest investments the average person will ever make in their lifetime. Thereby, it is crucial that the entire procedure is done right. Just as doing the right thing can bring you fruitful results, taking the wrong steps along the way will bring upon additional burden and drag you down.

Real estate truly is one of the best ways for massive wealth accumulation over time. However, it is imperative that you make wallet friendly decisions along the way so that it is sustainable for you. People generally tend to have a lot of hopes and emotions associated with their first house purchase. Starting with the location of the house till the price that you finally have to pay for it, there are lots of factors to consider when you’re in the market to buy a house.

Why you should buy a house in New Jersey?

The prices for houses in New Jersey have been on the rise for quite some time now. This may potentially work for or against you given your decision-making capabilities. Price for houses are increasing at an average rate of 5% year on year. New Jersey is going through a great reform at this period of time. Infrastructural developments are at the very peak which will cater to the local’s needs even further over time. Rising prices may not benefit the buyers initially, however, it is in the long run that you can reap the benefits of this investment as the market is predicted to favor the buyers considerably more in the years to come as the prices will level out more in the near future.

New Jersey is said to have some of the best quality schools in the world in terms of education curriculum and standards which is something worth looking forward to. Also provided that the close distance to New York City enables city dwellers to travel frequently, for both entertainment or work purposes. The transportation system is also considered to be of better standards when compared with neighboring states. People generally prefer to stay back in New Jersey and commute to work regularly because of the close proximity to Philadelphia or New York where living conditions may potentially be sub-standard or expensive. New Jersey has a great deal of amenities to offer to its residents starting with beaches to enjoy sunsets to buying clothes that are tax free!

The mortgage industry is also said to have become more flexible lately as the government sponsored enterprises that purchase loans from lenders are now allowing higher debt-to-income ratios for people looking to purchase a house.

For those who have completed military service, VA loan providers like Security America Mortgage, among many others, help veterans build their dream homes with special construction loans. It’s a great way for them to use their rightfully earned benefits.

New Jersey is said to be one of the best states of US to live in. You could easily Google out the best places in New Jersey to live in, and select a perfect environment that suits you.

What to consider while buying a house in New Jersey?

Buying a house can truly be one of the most overwhelming situations in your life. There are a number of factors that contribute accordingly. I have made a list of the 7 things that will make your life a little easier and you should definitely consider before you make that first house purchase.

Increasing prices of houses in NJ

The average price for houses has been increasing for quite some time now. It has considerably favored the sellers more in the previous years, however, it is projected that prices will level out more eventually and thereby it is best if only the buyers could hold on to their money a little longer.

Along with higher than average prices for the houses there are high property taxes and property mortgage insurance (PMI) to look out for as well which further increases the cost.

One of the contributing factors to the price hike may also be related to the shortage of supply of houses in specific cities. Meaning that there are fewer people in general who want to sell their house at this point of time in particular places.

Find someone who’s a local and a professional

Nobody knows a place, culture, market best than that of the person who stays there or is from around there. While housing laws and regulations may, more or less, be the same throughout the United States there are exceptions that needs to be brought out into limelight because that is what often makes the biggest differences when buying property. Also, it is of utmost importance that you seek the help of a professional because of the dynamic world we live in today and due to the complexities of the process. A professional has the industry knowledge, the technical know-how and years of experience under their belt all of which combined helps you get the best deal possible.

You can search for local, professional real estate agents in New Jersey through dedicated online real estate platforms and real estate firms. Social media is also a helpful resource; see if you can join groups that discuss real estate properties in the state. From there, you may find referrals from trusted acquaintances in the area. Better yet, they may help you get special deals alongside the usual assistance.

Location of your house

If you were to narrow down the simplest and most important aspect of property purchase, it would be the location. This is because there are a bunch of other factors that circulates around this. A shabby house in a good neighborhood is worth much more than a good and well-furnished house in a bad neighborhood. Thereby, location affects the price of property significantly. Also provided that there is an existing problem lurking underneath where some towns and cities across the state have more supply than others. The supply of homes for sale appears to be tightest in the Camden area, according to the latest housing data.

How much money can you spend

If you’re in the market for buying a house it’s important that you keep in mind that the financial aspects need to be kept under check as it is the most important factor to consider by a large margin when compared to other factors as things are very likely go haywire otherwise. Firstly, you should know that the purchase price of the house is not all that you have to spend because there’s more to it. It is standard that people pay 20% of the purchase price as down payment so you need to make sure that the money required upfront is taken care of as well. Also it is important to remember that it is not always about getting the longest payback period with the lowest payments but rather a more flexible payment process will save you the burden of having to pay twice or thrice the amount because of compounding interest. The amount of money you can spend on a house purchase depends on quite a few factors. The most important ones being your incomes and your debts.

Usually, it is advised that people spend a third of their income on this which includes your principle, interest, fees, and escrows. If you are making too large of payments you run the risk of defaulting and leave yourself no margin for error in case of a crisis like losing a job or getting injured.

However, you can also avoid paying the interest amount by the credit card.   

Make an offer that the seller cannot refuse

A very important factor to consider when you want to buy a house is the seller’s incentive to sell the house since it is operating as a seller’s market currently. Often times a seller will put up a sign but would not want to bother much whether the house gets sold or not. Here you do not have a lot of bargaining space for yourself. Whereas, at times, a person may want to liquidate their property as soon as they can where you can actually negotiate and make an offer. Thereby, you need to protect your own interests and make an offer accordingly.

Cautions to take while buying a house in New Jersey?

While buying a property in the state of the beautiful beaches there are things you need to stay on the lookout for:

Weather of New Jersey

Since New Jersey is situated in the costal regions it is very prone to catastrophic hurricane attacks. Also provided that New Jersey is one of the nineteen states that require a mandatory hurricane deductible as part of its homeowner insurance policy, the actual damage is very likely to cost you a large sum of money in the long run so getting insurance would be the smart thing to do. Besides hurricane, New Jersey is likely to get affected by floods or blizzards as well. Homeowners are required by mortgage lenders to get an insurance specifically for that as well. All of this further add up to the total cost of purchasing the house.

Higher Costs of Living

Taxation on transportation, food, shelter, adds up to a hefty amount which is not something that you would be delighted about. Buying a house can be costly enough in New Jersey and adding up further living costs on top of that can be cumbersome. Property taxes is also the highest there in the entire nation.

It is important to consider that you get a pre-approval for a mortgage when buying a house, however, the Mortgage Bankers Association forecasted that the mortgage rates are expected to increase in the years to come. Even though a forecast, it is important to presume that it is based on rational grounds and thereby it increases the costs and hence the total money that you have to spend to buy a house.

Traffic

Traffic in New Jersey is considered to be in one of the worst conditions in the entire United States. One of the reasons primarily is that New Jersey is the most densely populated state in the nation with 1,210 persons per square mile. New Jersey also happens to be a conduit between New York City and Philadelphia which further adds a large group of daily commuters to the already jam-packed traffic.

Bottom Line

The aim of this whole article was to give you an idea about New Jersey’s housing market, along with the best things New Jersey could offer you.

For your benefit – the facts about New Jersey that you should consider are also added accordingly. But we did exclude the detailed process of stages of buying a house in New Jersey; it’s basically the regular process and the offer and contract needs to go into attorney review before you move further. More to that, we excluded specific information about – how much is a downpayment on a house in NJ, or how long does it actually take to buy a house in NJ.

Now you might ask – is NJ a buyers or sellers market or is 2020 a good time to buy a house in NJ? The answer may vary depending on your particular need. That is why this guide will help you evaluate your situation and make a tailored decision.

Economists last year predicted that mortgage rates are going to increase, however, the opposite happened. While guesses and assumptions may be based on past records and data but current market trends are dynamic. While we know that the housing market in New Jersey at the moment is a seller’s market, but tides do not always favor one bank.

Due to the supply shortage of houses, meaning that seller’s reluctancy to sell houses caused the interest rates to go down. Now it’s much easier to gain access to a mortgage. Since buying a house is the kind of decision that will affect your life in numerous ways, the wisest thing to do is not rush through the process but rather keep an open mind to the opportunities around you.